Remember that scene near the end of Iron Man, where Terrence Howard's Jim Rhodes checks out Stark's silver suit of armor and tells himself, "Next time"?  That line must be ringing in his ears, as Howard won't be back for the sequel. 

It looks like the role of Iron Man's bestie, Col. James "Rhodey" Rhodes, has been re-cast: Don Cheadle will replace Howard in Iron Man 2.

Hollywood Reporter hints that the issue was dough - that Howard and Marvel had "financial differences".

This must really bite for Howard, who told MTV News back in August he was excited to get buff with personal trainers and don the War Machine suit.

Cheadle, who co-starred with Howard in Oscar (tm) - award winning Crash, most recently appeared in Ocean's 13 and Traitor.  Meanwhile, Jon Favreau is returning as director, and Robert Downey Jr. is expected back as billionaire industrialist Stark/Iron Man. Gwyneth Paltrow also is expected to be back as Stark's assistant, Pepper Potts.

Iron Man 2 is scheduled for release on May 7, 2010.

UPDATE!!! Apparently Howard found out this story when everyone else did, and he was pretty chagrinned. In an interview with NPR on October 18, he said:

It was the surprise of a lifetime. There was no explanation. [The contract] just...up and vanished. I read something in the trades implicating that it was about money or something, but apparently the contracts that we write and sign aren't worth the paper that they're printed on, sometimes. Promises aren't kept, and good faith negotiations aren't always held up.