Sgt_Kickaxe - 6:59 pm on Oct 10, 2011 (gmt 0)
I reached out to a team internally and they identified an algorithm that is inadvertently negatively impacting your site and causing the traffic drop. They're working on a fix which hopefully will be deployed soon.
Hope this helps,
Pierre (Google Employee)
Hopefully I'm in the same boat, 7+ years and never an issue until late Sept 2011. It's disconcerting that Google insists on making 500+ changes a year since this type of thing is virtually guaranteed given enough changes.