I counted it up, and Kennedy had actively wrestled for the WWE for 26 months. On the other hand, he had been either on the injured list or suspended for a total of 20 months. 26 months wrestling, 20 months not wrestling. As unlucky as Kennedy was, you simply can't push a guy who has that track record.
There is a rumor going around that Kennedy and Orton had a backstage dispute; during their RAW match, Kennedy dropped Orton on his shoulder with a bad backdrop, a body part that Orton has had injury problems in the past with. He looked legitimately angry at Kennedy for this. I don't rely on backstage rumors though, so I wouldn't take it as truth, though I wouldn't be surprised if Vince partly released him because Kennedy put Orton, a major future cornerstone of the company, in danger. It could be wellness policy too, though there has been no proof to that rumor.
I'd simply put my money on Kennedy being too unreliable, and when Kennedy got injured again, thus putting another push in jeopardy, Vince probably just decided to cut his losses.
That being said, I'd love to see Kennedy try his luck in TNA and hope he stays off the injured list there. He's got a ton of potential, but with his start-stop pushes, none of that could ever come to fruition.