So far there has been no indication of what led to the cancellation of the developer's publishing deal, although the fact that the team was primarily fired instead of disolved and reassigned within the company speaks volumes about the importance of this deal, as well as Day 1's overall financial situation.
The only way we'll know what actually happened is if either party decides to talk, which hasn't happened yet. Maybe Konami realized that Silent Scope games never worked well outside of the arcade and decided to pull the plug? Maybe Day 1 tried to relaunch the brand as an action-RPG stealth-shmup pixel-art XBLIG title? There's really no way of knowing.