Is there a basis to the argument that the capital of China shouldn't be Beijing and it should be a southern city? Did the communists just pick Beijing willy-nilly? Was Beijing chosen due to picking Mandarin as the standard language? Because of the Imperial Palace of the Qing dynasty existing there?
If anything has been a constant in Chinese history, it's definitely not where the capital was. It's been moved frequently for a huge number of reasons. At the beginning of the Ming, it was Nanjing, albeit only briefly. Xi'an (Chang'an) has been the capital many times as well. Kaifeng, Luoyang, Hangzhou (back when it was called Lin'an) have all also been the capital more than once.
Beijing, however, was not chosen willy nilly. In fact it's been the capital a whole bunch of times.
It was a capital from 722-481BCE, 907-1125CE, from 1115-1234, from 1271 to 1368, in the Ming as mentioned above from the eatly 1400s until 1644, then in the Qing it was the capital throughout the whole period from 1644 to the fall of the Qing in 1912, an then for a time in pre-Communist China as well before the PRC made is the official capital in the 1940s.
In other words, Beijing has a long history of being the capital, and for nearly the entire Ming and all of the Qing. There's precedent, and not just architectural.
It also had nothing to do with the choice of Mandarin. In fact the Mandarin that was the de-facto standard was that of the area around Nanjing right up until the 19-teens. Only in the early 1930s did it switch to a form of Beijing Mandarin (but not actually the form most people were speaking), and that change was done by the nationalists, not the Communist government. You could say that, looking at the big picture, the PRC basically just adopted everything the ROC had already set in motion as far as language reform. Very little that happened to the language after 1949 wasn't something that had already been started or attempted in the first half of the 20th century before the CCP took control.
Another important factor in the choice of Beijing was that, like Washington DC and other modern capitals, Beijing is very much a planned city. The layout of the communist capital was helped by the old city walls (which were removed and are now basically the Second Ring Road (二环路) but much of what was built outside the old walls was deliberate. This was helped by the topography of Beijing, being in a basin rather than the swamps of the Yangtze Delta. Swamp is a little harsh, and of course Shanghai was de-swamped quite effectively in the early 20th century, but the area around Beijing was significant in being more open and easily built upon. The urban sprawl the city suffers from so severely today is another consequence of that topography, but one that didn't really develop until more recently.
That said, I'd be interested to hear what reasons you heard for placing the capital of the PRC further south. Nanjing is the only one I can think of that fits your description. Hangzhou wouldn't have made a very good choice. There is of course a lot of native-place pride in China, going back centuries, so it's not too uncommon for people to throw around things like "this place was actually supposed to be the capital" or "Cantonese almost became the official language but lost by one vote!" (it didn't). Do you happen to recall what alternative was suggested, and if there were any reasons given? That'd be much easier to address with specifics.
Most of the dynasties which had Beijing as a capital (the Liao, Jin, Yuan) had multiple capitals and Beijing was only one of them. Geographically, Beijing was and still is a pretty terrible place for a capital. The main reason is that Beijing lacks water (at the risk of bringing current events into the discussion, the Chinese government just last year began pumping drinking water to Beijing from the south) and there weren't a lot of good farmland around the city. When the Yongle emperor built Beijing as a capital, he also had to extend the Grand Canal so that southern grain and rice could be shipped north to feed the population.
That said, I think one of the main reasons why the CCP chose Beijing as the capital of China was because Beijing wasn't the capital of the Nationalist government. The KMT had its capital in Nanjing, and with the CCP fighting to overthrow the KMT, it didn't make a lot of sense to have the new capital in the same city as their enemy's former capital, where support for the old regime was strong. There weren't a lot of other cities with the same background as Beijing and Nanjing - Chang'an was destroyed at the end of the Tang and the new city of Xi'an was rebuilt on a smaller scale, Luoyang and Kaifeng didn't make too much sense, and Hangzhou wasn't really a suitable place for a capital - so the choices were limited.