So I booked for a B2 visa appointment not realising the VWP and no longer need the appointment. Is it ok to cancel my visa appointment and then go for the ESTA instead?
At this stage you haven't actually applied for a visa, you have simply made an appointment. You can cancel your appointment online at any stage, however you will not receive a refund if you have paid any fees.
There's no need to cancel the appointment before applying for an ESTA, so I would suggest applying for the ESTA first, just in case it is rejected for some reason in which case you will still want the visa appointment!