In one of the sites I'm working on, we messed up the canonicals in March 2011. The web team uploaded a canonical pointing to a non existent URL.
The wrong canonicals were uploaded Thursday afternoon, and the Google traffic numbers compared to same day of the previous week shows that Google reacts fast:
Friday = 7% drop
Saturday = 23% drop
Sunday = 50% drop
Monday = 52% drop
We found the problem 11 days later, and by then Google traffic has dropped by 62%.
It's been several months, and our Google traffic is only about 90% of our March traffic. Recovery is slow, as our summer 2011 Google traffic was lower than summer 2010:
data compared to same month in 2010:
March 2011 = 41% lower
April 2011 = 43% lower
May 2011 = 16% lower
Recovery is not quick and immediate. From our experience, Google is not as forgiving and will not restore your traffic just because you fixed the problem. This is a PR 7 site that has not been affected by Panda.
Yes, be careful with canonicals. I have battlescars to prove it :o(