This update has been going on for few weeks now. Seems like it is going industry by industry as people at SEOchat are divided based on which industry they are in. Some people are experiencing changes, others are not. The prevailing theory is that Google might be devaluing link exchanges. At least between sites that aren’t relevant to each other, and that they might be placing an aging filter on links, so those links you got last week are giving you less of a bump than the links you got last year. Sounds sort of like a link sandbox theory to me.
In any case, most people are reporting that they are getting killed in the SERPS for a few days as Google completely ignores their backlinks, then it returns to pretty much normal later on. Where it finally stops, nobody knows. Guess it is affecting gambling related terms right now.