Looking from the outside I'd suspect that his comments over the weekend about Terry being stripped of the captaincy by the FA breached the terms of his contract. What I can't understand is when he first took over he publicly stated that he couldn't understand the english fixation with who was captain, he was used to the Italian system where the player with the most caps was captain.
So why did he now see this as a resigning issue?
At the end of the season I'd expect that Internazionale, AC Milan, Real Madrid Chelsea and possibly even the Mancs will be in the market for new managers. Capello has a reputation as a good club manager but he knows that He would be going to the Euros with a squad where his first choice striker is out for the first few games, his first choice central defensive partnership wouldn't be talking to each other, his black players might be resentful towards another member of his squad, his captain would know he wasn't his first choice. It's a disaster waiting to happen (see France) and thus would lessen his reputation. He's followed the example of our seafaring friend and jumped before the waters go too deep.