I think Cazorla was Songs replacement. Song was never a defensive midfielder for us last season, he was more of a box to box creative player. Arteta is our DM and will remain that this season, Wilshere will come back into the midfield and play with the two Spaniards. Rosicky, Coquelin, Diaby and Ramsey would be more than enough cover in Wengers eyes.
Wenger probably pulled the plug on the deal after hearing positive news regarding Wilsheres progress.