I am running an AdWords campaign for a couple of month now.
CTR used to be around 3.2% when my pages showed up first or second on regular SERPs for targeted keywords.
Now my pages show up on position 3 to 6 and AdWords CTR has risen to 5+% on average. Yes, free traffic from Google has declined accordingly.
From my point of view it looks like "give searchers irrelevant results on regular SERPs and they will click on paid AdWords to find what they are looking for - thous increasing "our" (Googles) revenue while keeping surfers happy - You found what you where looking for, didn't you?
If this is the case, I really appreciate the "new" Google style (you get what you pay for) - there is nothing like a free lunch in the real world and I really don't understand why anybody is expecting free traffic (converting into sales) from SEs. AND, no need to worry about updates, new algos or SEO techniques! Simply pay for the traffic and build your business model on that!
It also resolves a lot of the Spam discussion - why bother to spend your time on "optimizing" your site if Joe Sixpack chooses to click on AdWords listings once he realized that regular SERPs are just useless?
Maybe we are in for a major change on how SEs work or maybe I am on the wrong track and Google is simply broken right now.