We really don't know the whole story. It would be interesting to hear what McCarthy and the Packers management really think of Favre and know the story of everything that's gone on with him the last few seasons.
It's been my belief, going back to last off-season, that McCarthy decided last season that enough was enough and he demanded Favre put more time into his game preparation, etc. than he had been giving the organization the last few years.
Prior to last season Favre looked like a player on the downside of his career who went out and just "winged" it every week. He made some things happen by his natural ability, but he was terribly inconsistent. Then, all of a sudden this past season, Favre became a QB who played within the game plan and looked prepared. The one exception was our game against him. In that game he looked like the Favre of the last few years.
I think all of that work took the fire out of Favre. I think all of the study and game preparation took the fun out of it for him and he retired mentally exhausted. If you listen to his retirement pc, he made several comments to that effect.