My opinion on why the CAM was cancelled was that it competed with the true goals of the ISS program. It postulated that artificial gravity could stop muscle and bone loss and truly extend human presence in space. It turned out to be one of those "This town is not big enough for the both of us" conundrums.
We are seeing the results of the true goals accomplished on the ISS. They are:
1) Frequent dockings and undocking of visiting space vehicles. Each docking means $100s of millions of dollars in someone's pocket on the ground. This reason by itself is good enough to cancel the CAM. The reason they have such a high frequency of dockings and undockings is that the crew's muscle and bones are deteriorating at a rate of 1-2% per month and they need to replace the crew with a new crew with fresh bones. Its like the chicken or the egg. A perpetual cash machine that won't turn off. Very ingenious!
2) No science discoveries worth mentioning, except zero-G is very harmful on humans! Just pretty pictures and neat high school experiment stuff that helps justify having a space lab so something someday could be discovered. Parents of children who interact with the station crew in some manner whether it is sending and receiving a text message or planting a tomato seed from space in their backyard, cannot possibly use their vote against NASA. Yet another ingenious strategy to avoid the muscle and bone loss problem!
3) A space destination for the massive astronaut corps to go to. After all, you are not really an astronaut until you have gone to space. Without a destination to go to in space, you need no astronauts. Because there are practically an infinite number of astronauts willing to devote their entire lives to going to space for free, and they are willing to risk death on a second-by-second basis, who really cares if their muscles and bones are dissolved by zero-G? You are right. No one! Now, are you getting the picture?
4) The fact that if you are not an astronaut/cosmonaut, you do not really belong in space. You have no use to societies whatsoever because you are simply living out your childhood dreams. How selfish of you! Even if you try to make yourself useful, you will fail because everyone knows only astronauts/cosmonauts are the only ones allowed to go to space because they have paid their dues. Yet, you go there because you have huge sums of money that speaks for itself.
What is beginning to breakdown is:
1) I hate to say the obvious but the astronaut corps, e.g. Lisa Nowak incident, as well as other misgivings from astronauts that we don’t really need to get into. Most astronauts are gold plated and will fair well and deserve huge credit and notoriety for some time. I am only trying to illustrate the beginning of a breakdown. Since the shuttle is retiring, there will be a massive re-assignment of astronauts. You see the beginnings of this in the re-assignments that use “astronauts” to play the role of public relations.
2) Astronauts are taking up a smaller piece of the pie in terms of who is going to space. Space tourists, for example, are bypassing astronauts with a credit card to get to space before an equivalent astronaut does. More and more Russians and Chinese and Japanese are going to space than before. When you take this to the limit, no astronauts will go to space. Without astronauts, NASA manned space cannot exist. Sad news if things keep going like they are going now.
As fewer and fewer astronauts go to space to visit the ISS, the need to launch diminishes, the need to discover something to justify going there increases, and the need to truly find a way to extend the stay of an astronaut beyond the current 6 month limit that capitalizes on results from artificial gravity experiments increases. That day is coming since the new goal of sending humans to a near earth asteroid has appeared. To go there and come back takes at least 180 days. The first time they go there, they are going to discover something on the asteroid like frozen water for instance that is going to justify longer and longer trips which helps the justification for a CAM-like module on the ISS.