IMHO,
Well the 8086 required 16 data lines, that makes no sense in an 8-bit computer.
Commodore already had a CP/M cartridge for the C64, so they had a history of hardware development there (disk formats did suck).
While CP/M could run on an 8088, the 8088 was far more expensive than a Z80 that was there to run CP/M -- also the CP/M OS and software was proven. Commodores implementation of CP/M was always tertiary behind the C64 and C128 -- no one bought a C128 to run a non-graphical OS. I believe they just threw in the Z80 and CP/M as a publicity gimick to give weak justification to productivity on the C128 to people who did not know the C128 has such software.
