Here is what happened to my site.
Before the update i had over 80 keywords on page 1, and another 20 on page 2. Yes some were long tail but none more then 4 different words, most of them just two words.These were the ones i used to rank track any way, of course i got found for loads more longer tails.
Out of these 100 keywords there were only 20 which i really cared about and 4 that were very important and spent time link building too. I had actually built links to the other 80 keywords, but only three links each if i remember correct, a year or so ago I bought a profile links blast to them, 3 profile links each. The other 20 keywords I built more links too and bought some link pyramids to the 4 main ones.
After the update i dropped out for 99 keywords, ending up with just one ranking, my main keyword, which was position 1 and is now 18.
My on site SEO concentrated on the 20 main terms and especially the main 4 terms. Many of the other 80 keywords i didn't do an onsite or content for; i must have been ranking just from the small number of backlinks they had, the fact that many of them were synonymous with my main terms and because i believe my site was deemed an authority site for this niche.
My onsite SEO was not spammy, my content was all original, none of it was spun, I have no ads on my site.
This has lead me to believe that this update has included a massive change in the way they view back links, but also probably due to trying to target so many keywords on a single page, eve without being spammy.