I run a 3 year old site with masses of content and for the last year it's averaged at 2000 visits a day. Recently we got some great viral content going which was picked up by many authority sites in our field, resulting in deep links to our site and traffic surges.
We also had a few days where a couple of thousand visitors turned up from stumbleupon.
But then this last week or two, when there aren't spikes our google referrals have dropped by 50%. Forgive me for being naive, i assumed that good incoming links meant BETTER Google standing...
In addition, Google recently dropped our page rank from 5 to 4.
One of the most important things to take into account when designing a sites structure (URL structure) is the ability to grow the site if and when you choose to add more categories.
Have you had any downtime recently that may have lead to Google not being ale to index your site? This can and does sometimes lead to a fairly short term drop in rankings.
From your logs you might want to check your referring key phrases from the main search engines and see if you have dropped rankings. If so then you may just have to wait it out and hope that Google will re-index your content and put you back to where you used to be.