I'm surprised that you brought this up! I JUST logged on to add in pictures of an Altair booting CP/M off of a 3.5" disk. : )
The BEST disk drive solution for an Altair is the original MITS drive and electronics. This solution would be VERY expensive as a kit. The drives are close to $800, then the case, and the 4 LARGE PCBs. It would be more expensive than the Altair kit! The reason I say its the best solution for a disk drive is because it can boot MITS Basic and other MITS software.
I've been talking with someone about Altair disk solutions. He has a 3.5" disk drive connected to his Altair using a Tarbell disk drive controller board.
This solution would allow 8", 5.25", and 3.5" disks to be connected to an Altair to run CP/M. There are basics written for CP/M.
How many people would be interested in a card like this? Of course by the time I offered the disk drive card I would also have memory and terminal cards!
Here are some pictures:
