I'm going through the same thing right now. I've been with a wonderful woman for 5 years, one whom I love very much and who has stood by me through everything, and who will be by my side when I have my surgery in a few weeks. But the thing is, she's just not sexually attracted to women. I have to give her credit, she tried. And so did I- compounding the problem is that I'm not sexually attracted to women anymore, either. I've been fortunate so far, and she wants us to still live together as best friends, even if it means I find a boyfriend and we aren't together as a couple anymore. But no matter how understanding someone is about it, it's still a sad situation, and neither of you are to blame. Like Tekla said, it's just what often happens.
We always also said that we loved the person, not the gender, and that is still completely true. But the facts are that neither of us is asexual; we are both heterosexual and no matter how much we want to, there are things we simply cannot provide for each other. Like you, we saw this coming some time in advance, and in the beginning I was so afraid of hurting her I even told her I would try very hard to be a man for her. But she wouldn't hear of it, and she was very wise. She didn't want to live with a miserable man, and that wouldn't have been fair to either of us.
Don't blame yourself, and don't think that sacrificing your own happiness and peace of mind for someone else will help either of you, because it won't. No one is at fault, it just happens and we learn to live with it as best we can.