Perl was the only language on the block with strong built-in text-processing capabilities. For many a biologist the Camel book was the only programming book they read before moving on to solve real biological problems instead of fiddling with programs.

Python & Ruby did exist however their VMs were no where near as reliable and fast as Perl at that time. Another viable option would have been tcl but like you say Perl was probably better suited.

I wonder if perl would still be used if the project was started today.

I think so. But would that be perl5 or perl6? :)