There are many vegetarian diabetics, some with good control, others terrible. The diet has the potential to be effective but a vegetarian diet comes in many guises. Pulses have a low glycemic index and many find a gi diet effective. Soy and other vegetable proteins may produce less stress on the kidneys than animal proteins. In addition, nuts (eg, almonds), soluble fibre from oats and barley, soy proteins, may help reduce lipids.
There are some low GI vegetarian cookbooks, though I don't know of one aimed specifically at diabetes see the glycemic institute website for details.
Vegan diabetics have their own guru in the shape of Dr Neil Barnard. He has published a paper in Diabetes Care showing some sucess with his diet (Low gi vegan) and like all Gurus the book of the diet.