I have no idea why Cleveland dropped out, the proposed trade had them getting Kris Humphries, a 1st, 3 million, and a couple of young cheap players and essentially all they gave up was Luke Walton. It was also rumored Humphries was only going to sign a 1 year deal. So they would have received the best player (of those involving cleveland), a first round pick, cash, and prospects for a backup SF.
Seemed like a great deal to me.