A friend of mine who is also diabetic has had the pump implanted,he said although recovery from the surgery was painful it was well worth,him and his wife now have a healthy sex life.
Are you taking medication for your diabetes? If so, many of these can cause libido problems. So can depression.
Talk to your Dr about possible options. If you have a healthy heart Viagra may be an option. There's also the pump. Those are just two things I can think of right now.
Don't give up until you've tried everything your Dr recommends.