If you consider Canon's need to differentiate the 1Ds range from the 5D range, a square sensor could be a way to do that, given that it is probably a more practical aspect ratio for studio use. Another benefit is for those instances when you have to use direct on-camera flash, and you have no way of avoiding ugly shadows other than keeping the camera upright, you don't lose so much in cropping.
That may be sufficient for wedding and portrait shooters to prefer a 1Ds series camera over a 5D series camera...
From an engineering perspective, a square sensor may be less demanding on lenses than a 2:3 sensor - because of less use of the fringes of the light circle. While I do not have sufficient technical expertise in this area, I suspect a square sensor might allow Canon to pack in more, smaller pixels and still get sufficient image quality.
After all, a 24x36mm frame is purely a relic of 35mm film.