I think dofollow links help more than nofollow links.Dofollow links will give advantage in SER but nofollow links are only give benefit in traffic.
My site suffered a bit as well, even though i write 1000+ words original content. But I suppose it's nothing to spend time thinking about, what you need to do is keep building links and posting content and your website will climb the ranking ladder again. most likely your competition was also hurt a bit so take them down while they are still fighting to keep their positions! =)
that is the weird thing, my rankings for 5 other keywords have improved except for my main kw that has been affected!