tedster - 6:36 pm on Sep 3, 2010 (gmt 0)
I'd say free directory submissions are very unlikely to be the cause of your "slow, continuous slippage". At worst these directory links are just ignored. Otherwise it would be too easy a method for hurting your competition.
It's more likely that things are changing around you. Study those who Google now ranks well on your terms with an eye towards what Google feels is better for their end user.