i would never encourage some1 to throw away a friendship, but to encourage to try mend it.
i was in a VERY similar situation last year actualy...i got very close to my brothers best friend, and we always bikered and we liked each other. when i no longer liked him, i wanted him to know, so i (subconsciously) got personal with him, made the arguments more serious so they werent flirtatious! could this be the case here? maybe you both just want to other to kno you no longer like them in that way?
what i did once this was pointed out to me was talk to him, i explained that i hated arguing with him, and i was just honest with him about how i felt. he was so understandng, and we now have a great friendship!
whatever you do, i wouldnt throw it away yet!