Dropping HS2 is clearly two things:
1. It allows the Tories to list of a huge amount of alternative plans (even if those plans have been shown to included a lot of nonsense), in constituencies all over the country.
2. It creates a trap for Labour. If they say they'll build HS2, then the Tories will talk about the £40billion+ tax bombshell that Labour will have to drop. If no tax rises, then it'll be "where will the money come from?" Even though the a lot of the other plans had already been promised, it'll be presented as either HS2 OR all those other plans - and the Tories are allowed to look responsible. Given that the announcement has been such a monumental fuck up, Labour have taken the most pragmatic option, which is to say the Tories have messed up, and we don't know if we'll be able to fix it.
If you can think of a better idea for Labour, I'd love to hear it, but all I see is the Tories have messed up, and Labour aren't interested in letting them off the hook.