The clarifying agreement: (https://dot.kde.org/2004/07/24/trolltech-and-kde-free-qt-fou...) finally fixed things in a way to where if Trolltech got bought out or stopped releasing the free version, it would immediately become BSD licensed. This agreement still exists to day as far as I know.
As far as I remember discussions going back then, people did not trust Trolltech much, and knew the license situation was "weird" - even after the GPL licensing. I don't have anything I can cite specifically, only old discussions that I vaguely remember.
I think Ubuntu went with Gnome because back then it was perceived as the less configurable and flashy, but also less confusing of the two. KDE 3 was for those who wanted to configure everything - the "power user" crowd. Gnome 2 was more spartan (and became more so over time - I remember the outcry when they replaced the path textbox with breadcrumbs!), but mostly "just worked" in ways that people coming from Windows or OS X could readily understand. And Ubuntu was supposed to be the Linux distro for casual users...