I would also encourage you to seek support in the form of a support group for the parents of children with diabetes, or, if none is available in your area, just a general support group for parents of children with special needs. Your wife is grieving the ideal of a perfect child she must have formed long before getting pregnant (probably back when she was playing with her dolls being a little girl). If she gets in touch with other parents who have been there done that, it might help her deal with grieving.

In my area pediatricians would be in the know about such support groups. Ask around.