I was looking through the questions on this forum and thought that this open post of almost a year ago is something to reflect upon. Especially since many people are STILL believing in the old way of doing SEO.
The main purpose of the update was to stop people from "gaming" the system, where they can simply use key word stuffing or other non-helpful strategies to get their content listed at the top of the search results. They want quality and meaningful content to be at the top of their search results. Otherwise, using a particular search engine could end up being a waste of time. Why use a tool that doesn't find information for your needs?
Watch out for those who promise "quick results" with only a minimal effort and minimal content. Shortcuts in SEO are being closely watched in order to make sure that search results are valid. If you think that you can beat the "system" - I'd recommend against it. They employ quite a few smart people out there in Google, Bing, and Yahoo.
Quite simply, you need to concentrate on publishing QUALITY, relevant, and timely content to your specific customer-base. If you do that and people find value in your work, you will see your search placement climb. I would also recommend making sure that you make use of the resources that people are putting out there. Especially, for those of you who aren't following the changes in SEO. As the world gets more and more connected, you'll find that people tend to find out very quickly what is valid and valuable as opposed to those simply trying to make a quick buck.
I keep hearing that SEO is "dead", but I would say that it's evolved (and evolving) to include social media and its various avenues. Use social media to make your customers aware, involved and believing in your "brand". Building up your core identify this way will help you weather any of the changes as they occur because you'll always have that core of loyal customers who believe in you.
Want to some validation on what I'm saying? Check out Google's Matt Cutts (he's got a slew of videos in Youtube on the subject of SEO) as well others like SEOMoz who are dedicated to this industry. I'll end with a paraphrase (as I'm not sure of the exact wording) from Matt Cutts (he's currently the head of Google's Webspam team) on SEO: "We may never really be rid of the current definition of SEO, but instead of Search Engine Optimization, we should call it Search Experience Optimization." Focus on publishing quality content for your customers, and keeping it relevant and timely.