My "organic" site is getting more free traffic from Google than ever before, and the same pages get top 10 (often #1) rankings and Google referrals day after day, week after week, month after month. (And yes, some of those pages involve very competitive keywords.)
Over the long haul, my pages have tended to creep up in the Google rankings, with only very slight up-and-down variation from month to month. That doesn't mean other Webmasters aren't feeling pain; it does mean that such pain isn't universal.
IMHO, the more you optimize for specific factors (anchor text, keyword density, etc.), the more vulnerable your pages are to even minor changes in the Google algorithm. And as Google continues to refine its techniques for distinguishing between artificial and natural patterns, the harder it will be to manipulate Google's search results.