The woman who is the moderator of the low carb diet forum at about.com has a rebuttal to this study. She makes some valid points about the flaws in this study.
At junkfoodscience blog at blogspot, Sandy cites some research that says that no diet in particular has ever been shown to be effective for diabetics long term.
There is so much more that is not known about diabetes than is known - you have to approach all claims with a healthy dose of skepticism. I wish there were some absolute answers.