I'm sure Paramount saw the book and thought it may be a good story and bought the rights. The problem obviously has become is how to make the film into a blockbuster and adhere somewhat to the book and the original storyline.
Temis made a good point earlier as well that it may have been an interesting story for some of us to film the zombie plague as written, I'm doubting that approach would have had mass appeal. The general public expects big visuals and it to be fast paced.
World War Z is a great story as written but not IMO a great story to put into a ~ 2 hour film with big stars who command large salaries which makes the film very expensive to make and therefore demands a large audience to pay for itself.
I never bought into the argument that the book couldn't be cinematic yet largely faithful to the format with a few key changes. All the big visuals and action are there, just in separate anecdotes from the people being interviewed. And instead of putting the focus on one big star, they could have had a huge international ensemble cast of talented actors and actresses to fill the various roles in the book.
I always thought a good template for a cinematic adaptation of
WWZ would be the Edward Zwick movie
Courage Under Fire with Denzel Washington. I understand that Hollywood would want its leading character involved in the action somewhat, so like that film, you can give it a framing story where the interviewer recalls his own experiences from the war. You could have him be embedded with one of the units who fought in the Battle of Yonkers for instance, which gives the film a chance to start off with a massive battle that hooks the viewer in.
After that, the reporter is sent on assignment to interview various survivors about their perspectives on the war, similar to how Washington interviewed the survivors of the primary incident in
Courage Under Fire to find out the truth about what happened, but in this case it would be numerous unrelated people with unrelated stories. In the end, everything he learns from the others could give him a new perspective on his own experiences and thus tie the sorylines together.
It's close enough to the book that Paramount would get their asses sued if they didn't acknowledge the writer by naming the film after his book and paying him a shit load of money for the rights. 
