I think Pep likes the idea of Cancelo to allow Mahrez or Bernardo to go more central.
I don't think Pep trusts Walker to deliver any attacking threat on the wings, unlike Mendy who is a monster in this department.
Also, probably thinking too deeply here, maybe Pep wants Cancelo so he can play Sane RW an play inside and be dangerous cutting in. He doesn't like Sane RW because if he is wide then he can't really cross on his weaker right foot, but Cancelo can do that instead with Sane playing inside more to shoot.
Mendy-Sterling on the left, Cancelo-Sane on the right... That's probably the most lethal wing combination in world football.