You definitely need to fire that Gyno. he/she is just stupid! Seriously! (sorry to be blunt-but the docs who deny this nonsense really get my hackles up :)
Ovarian cysts are one of the few things that are listed on BOTH the patient and physician literature. It is a very common side effect. You can go to the official mirena site and see for yourself.
I am confused about the location of the IUS. Is it in your uterus, or is it still in place (in the cervix). Did you see the ultrasound? You certainly don't want that suc*** floating around in there-yes, it could be embedded-but need more info. I would recommend a 2nd opinion (the sooner the better). The cramping (amongst other things) would concern me.