Apparently Favreau was unhappy about a lot of things. He was lowballed at the beginning before he even signed on. He was forced by Marvel to include storylines and subplots that he didn't want to do including the Avengers stuff and apparently they were doing the same thing with early discussions for Iron Man 3
What really worries me is that according to Cinema Blend it says Robert Downey Jr. is also unhappy and has similar concerns. Of course, he's contractually obligated to do Iron Man 3
but now with Favreau's departure he may not be exactly happy to do the film.