As for why not make CPU's with diamonds, I'd imagine it would be a pretty expensive thing to make, much more so than silicon based CPUs.
Man made diamonds have the same properties as natural ones and they are alot cheaper.
Believe it or not, natural diamonds are one of the more abundant precious stones available. It's just that the prices or diamonds are kept in check by the diamond cartels and jewelry industry as they work to keep availability low and jack up the price. In reality, natural rubies and emeralds command a much higher price to compared to a diamond of the same carat weight. Industrial diamonds are actually reasonably priced, compared; but I don't know if the quality (industrial vs d color flawless) of the diamond would make a difference for a cpu. So, even though synthetic diamonds are chemically the same a natural diamonds, I also wonder if there is something inherent in the process that would make them less desireable for a cpu.
Julian33 has it right, silicon is the 2nd most available conductive element on earth right after oxygen.
Yeah the diamond industry is f'ed up.
Most scientists agree that when nano-technology really leaps foward, diamonds will be the first objects synthetically produced through nano-manufacturing, because they are the simplest compound.
In fact, there have even been a few fiction books (one prominent; the name eludes me now tho) that try and illustrate what a diamond-manufactured woprld would be like (Windows made of diamonds, etc).
At any rate, a lot of compounds can be manipulated to become semi-conductors, but silicon has special properties that make it a great candidate. An electric charge is nothing more than electrons moving across atoms, and it's not hard to encourage that through chemistry with normally non-conductive elements.