Diet

Cardio best for weight loss, work out how many calories you should eat a day based on your age, weight, height, probably find a tool on google for that. Any dramatic changes will probably need counter acting by adjusting insulin dose, pre and post workout if you do any. Keep a detailed diary of levels, excercise at start till you've adjusted. Good luck

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I'd go with pilates and the muscle tone will flatten your belly and won't be a bulge
but diet is to cut the carbs down and keep the protein and fat up, have a read of the LCHF diet that as a telletubbie T2 I do.
Run it through your nutritionist/nurse, it's there job to help you keep healthy and work with the goals you make
They will advise you how to keep your BG within limits and adjust insulin to suit.
never run your sugar high and get sick to lose weight, it's unnecessary and will only cause more trouble than it's worth

Try and work with a dietitian if your stuck on ideas on how to reduce your calorie intake, as Brett says any changes to your diet will mean adjusting your insulin doses and this is especially true when the weight begins to fall off, good luck!!!!

Unfortunately you can't target where the weight loss will be so if you only want to "lose a bit off your belly" you may only need to do some toning exercises ? Crunches or similar ? If you just want general weight loss, you've had some great advice so far. Good luck