I believe it will eventually and automatically be denied and closed. However, as far as I know (and I don't know much) that application will remain in the record so if you told a whopper (i.e. a big lie) in that application that could come back and haunt you. Some small inaccuracies on N-400 can be dealt with during interview, but you are past interview. If your problem would be inaccuracies on listed trips, you might get away by waiting for a while and then apply some years down the road. It's hard to say, but if you have come this far and your application doesn't contain material omissions or misrepresentations I would encourage you not to give up, try to collect as much information as you can and respond within 30 days. At least you stop the clock ticking and put the ball in their court to decide what to do next.
My 2 cents
You don't get penalized for inaccuracies. You get penalized if you actually misrepresent things and that means you have to know that something is not true when you make the statement. He is saying he does not have the records and is reconstructing this as best as he can - even if he makes an honest mistake, no one said anything about lying. On the other hand, he may have to explain such inaccuracies, i.e., I forgot or didn't have records.
Yes, if you don't do anything they will close the case. I think the materials will stay in your file though, I'm not sure what you are gaining by not pursuing this - if you honestly don't have the passport.