For being a spoiled only child, it sounds like he is acting appropriately. He does sound immature (socially). He should not be retained for this alone. I would not agree to this. This teacher needs to help him become independant and encourage him to play with the other children. Is this teacher young?
If I were you, I would make opportunities for him to interact with other children. Take him to places that have lots of children that he doesn't know so he can learn to get along with others. This will be one of the most important things that you can give your child.
I can't believe the school would stand for retaining a child who was doing very well academically.
Also, this is just October. She's thinking of retaining him? I don't think "retaining" discussions usually happen until the second semester. She's brought this up already? Really? ??