Jon's relationship with Marvel was shaky; this corporation is not generous with actors as most "film" companies. There were rumors about the contracts, also Robert had promised Jon he would play the lead in Cowboys and Aliens that Robert had to back out of due to Sherlock Holmes. Latest news about Iron Man 3 director will not be Jon. They were recently at the fun raiser for President Obama, and to my knowledge remain friends, Robert will always be grateful to Jon Favreau for his decison to cast him as Iron Man.
Also worth noting that Favreau had a producer credit on "The Avengers"; also, Robert dropped in at ComicCon last year to surprise the audience while Jon was talking up "Cowboys & Aliens." So any rift was probably more business than personal and they've moved on. Favreau has also said he hopes to continue as Stark's driver, Happy Hogan, whether or not he directs.