It was cancelled because it was expensive to make and Paramount's suits in the big offices didn't care about Trek anymore.
Leonard Nimoy even talked about that at Vegas a couple of weeks ago. He said Paramount thought they were done with Star Trek. That's why they sold off all that stuff from the shows at Christies.
Then they approached JJ Abrams for a 3-movie deal and he said, OK, but I want the first one I make to be Star Trek.