1. Don't panic. Many times these things correct themselves.
Google has a history of implementing algo changes then tweaking them over the course of several weeks up to a month. It is not uncommon to see SERP positions change dramatically for a month or longer then restore your site to it's former spot.

I have personally experienced such downturns on my own sites and those of clients. Most times the rankings return.

2. Sometimes the rankings do not return :(
If you have waited at least a month and your positions have not corrected, then it may be time to tweak your site. The best approach is to review the new SERPs and if they are fairly relevant then review the newly ranking sites, particularly on-page factors, to see if there is a difference between what your pages look like and what theirs do. If you see an obvious change, then try tweaking a few pages to bring your site into balance with what Google seems to be looking for.

3. Sometimes a ranking loss needs a second opinion
Webmasters can sometimes be blind to what is wrong with their site. I have been guilty of this myself. I let someone else review one of my sites and was surprised when they picked out a section that they thought could be improved. It was a revelatory moment for me because I realized that I was not as 100% objective as I had aspired to be. An objective review by someone else can result in fresh ideas for correcting issues you may have overlooked. Take a look at the excellent dropped site checklist discussion [webmasterworld.com] for ideas on how to diagnose these issues.

What are your experiences with ranking changes, how did you handle it?