I've only heard good things about their relationship in series 3 so I'm gonna go on that :) In fact after I heard about the hub being blown up the first thing I thought was that Jack might move in with Ianto? Thats one way their relationship could develop.
As for Ianto being retconned I just think its very unlikely. From the way GDL has been talking about a possible series 4 it seems he's confident Ianto will be in it...which he should be, of course. I wouldn't watch the show without Ianto and I'm sure a lot of other people wouldn't either.

Random sidenote: For some reason I'm convinced Gwen is going to get pregnant in series 3 (with a baby this time...)