Diesels aren't ideal for all applications
Diesels have weak points in NVH and smoothness at startup. They're also heavier and more expensive for a similar application, and require expertise for maintenance and service. I think the long-term ideal ICE is probably an HCCD flex-fuel engine, and GM is working on HCCD. This offers some of the best qualities of both diesel and spark-ignition engines, but the added expense of the system would probably better suited to ICE-only cars than to the Volt.
You have to keep in mind that GM will be able to use a fairly simple engine effectively. They just need to select an engine that has its peak efficiency in the same RPM range they're seeking to turn the generator... no complex variable valve timing, etc. because they'll be able to optimize the engine for a narrow RPM band, it just needs to start/shutdown smoothly and run efficiently at the generator's preferred RPM.
Gasoline has fewer problems in low temperature ranges than diesel, is available at every gas station and is (at the moment) significantly cheaper than diesel. I think GM should pick their battles... Americans are VERY skeptical of GM automotive diesels for purely historical reasons. Many Americans couldn't point to Belgium on a globe, they don't understand that GM produces very good competitive automotive diesels in Europe, they just remember their dad's horrible 350 diesel Oldsmobile.