I thought it didnt matter so much but I increased my KW1 (I target a KW1KW2 combo) by about 6 additional words on the page increasing density by about 2%. Oh, dear, my serps dropped from #6 to #12 - and I had added 10 new pages and I am still getting backlinks. Maybe it's just a flux but last week when I drastically reduced my density my serps improved - coincidence ?
Definately flux. Did you check all of the datacenters using mcdar's tool? http://www.mcdar.net/dance/index.php Hexed