It would be a sad day for cricket but it looks like he will retire after the last test against Saff. I usually don't consider batsmen as match winners but he is one of the few that I can think of as a true match winner.
Anyone in his place would be unhappy with all those leaks.It was up-to KP and ECB to come out with a compromise like the rules will stay but just for t/20 worlds we will allow you to play. To go into t/20 WC held in alien conditions in SL without your best player makes ECB look very foolish indeed.
As far as IPL is concerned it is tougher to find a solution. In-fact ECB are lucky that KP is one of the very few players from England who plays in the IPL. It isn't the case with WI, SL or, NZ. If you are over 30 and look at a league that offers you money for just say 8-10 overs of batting it is natural that players will be tempted to play.
Dressing room problems? KP never seems to be liked by anyone but for an outsider it looked like he had a working relationship with Strauss and co.You never felt KP was on talking terms with Jimmy and Swann though. When KP was the captain in 08 he was treating Jimmy almost like a part-timer. It got to such a stage that after he got S'wag out in the 1st innings at Chennai leave alone doing high fives with your captain he didn't even look at him

There was also this incident in the 2nd innings when Yuvraj was smashing Jimmy all over the park and KP kept using the fword all the time to him

Colly seemed to be his one and only friend. For an outsider though it is hard to comment.
The only national coach who can say that he handled KP well? DF.