Density functional theory and ab initio molecular orbital theory have been used to calculate the energetics of C-2 insertion into C9H12 and C9H14 clusters that model unhydrided and monohydrided (100) diamond surfaces, respectively. The reaction of C-2 with either the C9H12 Or C9H14 cluster is exothermic by more than 100 kcal/mol, but the lowest energy product is different for the two clusters. The reaction of singlet C-2 with the C=C double bond of the C9H12 cluster leads to either carbene structures or a cyclobutyne-like structure, with the former having the lower energy at both the HF/6-31G* and B3LYP/6-31G* levels of theory. No barrier for insertion into the C=C double bond of the C9H12 cluster was found at the HF/6-31G* and B3LYP/6-31G* levels of theory. The reaction of singlet C-2 with the HC-CH single bond or C-H bonds of the C9H14 cluster leads to a structure having a cyclobutene-like geometry. We propose that the disparate nucleation rates of diamond crystallites grown in hydrogen-rich vs hydrogen-poor C-60/Ar microwave plasmas are accounted for qualitatively by these results. The carbon dimer, C-2, is a possible growth or nucleation species produced by fragmentation of C-60 Periodic density functional calculations of the electronic structure of a simple model of an sp(2)-bonded diamond grain boundary show that pi-bonded planar defects introduce new electronic bands into the fundamental band gap of diamond.