Among the issues is the concern that not only Israel but also Palestine are outside CENTCOM's AOR and are considered part of the European Command's AOR, and general Petraeus is portrayed as asking that Palestine (but not necessarily Israel) be included under CENTCOM. (I'm not sure if it's still the case but it also used to be true that Time and Newsweek distributed their European edition, not their Middle East edition, in Israel; I think so an "Israel" price wouldn't appear on the cover of issues sold in the Arab world.)
If you read the two updates to Perry's post, you'll note that a) the Pentagon denied that Petraeus had sent a memo to the White House, but b) there's a clarification that Petraeus sent the memo to Mullen. (For those who aren't wonkish on this stuff: Petraeus is commander of the US Central Command, covering the Middle East except Israel; Mullen is his boss, the Chairman of the Joint Chiefs of Staff.) In other words, the denial is of the specific detail, not the overall story.
The real story here, I think, is that CENTCOM has always been treated as a Gulf Security and Southwest Asia force even though ,
It won't happen, unless I'm missing a bigger sea change than seems likely, despite the Biden snub. But the fact that Petraeus and Mullen may be arguing for it is very interesting. It suggests that Petraeus is not just one of our smartest CENTCOM commanders (I don't know if any of his predecessors had an earned Ph.D. as he does), but one of our shrewdest and, it would appear, boldest. He's saying something his predecessors have thought and haven't said. Of course, he's venturing into what the Supreme Court once called "the political thicket," which can be dangerous ground for men in uniform. Ask Douglas MacArthur. Or George McClellan.
All assuming, of course, that Perry got his facts right. Some related thoughts by Andrew Exum here.