tedster - 7:40 am on May 10, 2010 (gmt 0)
This can be a difficult situation to diagnose. It could be a bug at Google; it could be a penalty; it could be a loss of some key backlink power - and there are many other possibilities, too.
Do you have a WebmasterTools account? That's the first place I'd check. Look for messages from Google and look at the "Top Queries" report. Look for Crawl Errors, and so on.
If you do see your target keyword in Top Queries, click on the plus sign and look at all the various positions where Google has ranked your site during whatever time period you want to set. Then notice what kind of click-through rates you are getting.
It seems very likely that many sites do not hold their rankings if the title and snippet are not attracting clicks, and Google Webmaster Tools is the only place I know of you can see IMPRESSION data and not just traffic data.