We're more than used to this phenomenon with Yahoo! but with google this is the only site that does this for us.
Basically, the site is a few years old, ranks well for some competitive terms (mostly just the homepage ranks, not the 100 or so content pages)... but every other day it completely disappears from the SERPs.
I've seen this with new sites, sites that just broke free from the sandbox, or sites that have had recent major changes. I've just never seen it go on this long with an established site.
Yes it happens. We were #1 for our main keyword for a couple of years. Then bam! We were nowhere to be found. Our site resurfaced after 4-5 months later at the top 3, sometimes at the top. And it's still there, although I'm keeping my fingers crossed that it won't disappear again.