I recently got a new harddrive, SSD!!!! So I made the decision to wipe the slate and did a clean install. But as always not every thing worked as before, as always. One of the most annoying things was that Alt + left arrow did not jump one word to the left and vide versa for Alt + right arrow. This is OSX default behaviour, on Linux it is Ctrl + arrow keys.
Anyway, to solve this you need to change what iTerm sends when you hit the key combination. Quickest way is to change set keys shortcuts for the default profile to "xterm Defaults"
bind '"\033[1;9D": backward-word'
bind '"\033[1;9C": forward-word'
Reload your config file or open a new terminal and I have Alt + arrow keys back working.
Have a look at http://superuser.com/questions/357355/how-can-i-get-controlleft-arrow-to-go-back-one-word-in-iterm2 also.