What I have noticed with these Panda updates. It looks to me that they move the sites that they want to keep off of page 2 and sometimes page 1 and bring up all the crap sites. Then after 3 weeks or so the crap sites disappear and the good sites move back to their original position or better. I had this happen to me 3 times already.
1. Continue adding content
2. Continue linking, get a couple high pr links
3. Add Web 2.0 sites
3. Keep doing what you are doing don't stop.
These are my observations of crap sites
1. Affiliate links all over the place
2. Sites that have less than 10 pages and are not consistently added to
3. Articles don't make sense (spun)
4. Spammy crappy links, many blog posts with pr n/a or 0 with hundreds of comments.
5. Links not varied enough, articles, blogs,forum,directory,bookmarks,web 2.0 etc...
Take a look at the sites that have replaced yours and check each one.