this happens every now and then to innocent sites, just last week, one of my valuable sites also disappeared (ranking-wise)and usually when this happens, I check whether or not the site is still "indexed"
and it was/is still indexed...the next thing I do, I did a "duplicate content" check (cos sometimes competitors will do this, use your website phrases etc etc)
but the main culprit was "url redirection abuse", its a server issue, a folder about "pills, viagra" have been injected on my site and Google has indexed them all
I had to delete these spam injections and submit a reinclusion request to Google and at the same time re-submit an updated sitemap
now Im still waiting for the next refresh