Jon Favreau was on Howard Stern this morning talking about the new Iron Man DVD when Howard asked him about Iron Man 2 and what the plans were. I don't remember the exact quote Jon used, but he all but 100% confirmed the appearance of War Machine in the next Iron Man movie. Which of course would be played by Terrence Howard.
Since Obadiah died at the end of Iron Man, sorry, spoiler, but fuck you you shoulda already seen this movie, the plot of Tony Stark relapsing into alcoholism after Obadiah takes over Stark Industries might be out. Maybe Stark loses the company to the board of directors or someone else? Thus causing him to relapse and Rhodes then taking over the Iron Man suit? We will have to wait and see.
My guess, for the plot is that, much like the comics, Rhodey uses the suit meant for Stark but in doing so causes him to go into a manic state leaving Stark to build a new suit to take Rhodey down. Leaving the two to reconcile and team up to take out............ The Mandarin. Who was confirmed long ago by Favreau to be the films main villain.