I prefer the term "embrace"... turning it into "celebration" risks making failure the goal. It is absolutely critical that people be allowed to fail. If people can't fail they won't take risk, and risk is where real innovation happens. But we should be careful not to turn failure into the new success.

Respect people who took a chance and failed. Learn from them. Embrace them. But I'd stop short at celebrating them. Save the celebration for next time (or 5th time) when you finally succeed and accomplish something amazing.