According to Variety (and being repeated all over the 'net), Avi Arad stated:
"We want Nick to make the movie. We had him," Marvel Studios' Avi Arad said. "He's an 'Iron Man' aficionado. Everything was fine and then negotiations got delayed. We lost a year."
Supposedly this came from the conference call yesterday, but I don't recall hearing that specific quote. It's also been reported that Cassavetes is working on a rewrite of the Gough/Millar/Hayter screenplay. Not being familiar with the man's work, I don't know if this is a good thing or a bad thing. Hearing that he's a fan of ol' Shellhead makes me feel better, but who knows?
Also being reported is that New Line is still committed to making the film, so maybe Iron Man isn't as dead as I thought.