The following post may contain spoilers, so beware!
The entire Iron Man crew are currently making the press rounds (they'll be in NYC on Sunday, so expect a slew of quotes to come flying next week), and already director Jon Favreau knows exactly where he wants to go with the Iron Man sequels -- so much so that he's dropped a bunch of hints in the first film, due out May 1. He tells Rotten Tomatoes, "I've got another two movies in my head; I'm ready to go and I know the cast feels the same way," he said. "Now it's out of the hands of us, of the filmmakers, and it's even out the hands of your readers. I know all the people who have been following this for two years are going to go and see the movie, and maybe they'll see it twice and I'm very grateful for that. If everybody comes out to see the movie and it's successful, then I'm sure Marvel's going to want to do another."
Be careful with that RT article because they do spoil some stuff, like whether Samuel L. Jackson actually shows up in a cameo role as Nick Fury. But perhaps the biggest set up for a sequel -- spoiler warning -- comes when Jim Rhodes (Terrence Howard) glances at Stark's Mark II Iron Man suit and says to himself, "Next time baby." It certainly looks like the second film would involve Rhodes in costume, possibly as War Machine, but as IGN points out, Rhodes first dons another suit in the comics. Howard told them, "If you've read the comics you'll know that that is the next phase, but there is another intermediate phase in there where he would have to put on his best friend's suit for a period of time."