Yeah...it is all about a constantly evolving algorithm. Things are getting difficult for the webmasters. However, important things like informative content and authoritative backlinks remain at the same position. Here is an explanatory article that will help everyone to get an insight on Penguin 3.0 : http://www.resource9.com/google-releases-penguin-3-0-latest-google-update-year/.
Its another way of Google to tell marketers they are screwed. A lot of webmasters are outraged, at what Google has done this month for sure.
The update target spammy links and sites. If you are affected by this update better remove spam links of your sites. Then wait for the next refresh for any improvement.
Why? Remember only 1 boy can be the 1st boy in the school. Means not every webmaster is SEO guru. Don't be so happy . Wait for couple of weeks. It is now in unstable situation. You will get stable results after two-three weeks I guess! Like always!
I don't really believe this even though google says that. I think the penguin is to weed out the sites that do not have celeb or corporation status.
Sad to say but yes this was a bad idea. The only way to recover at this point is to undo the spam links that Link Emperor created. I also hear many people got penalized by using link emperor. You can get your rankings back so thats a good thing.
Google still holds all of the cards, as long as they're so secretive and slow in releasing new algorithm updates. In saying that though, people need to remember that Google does not owe them traffic at all. It is merely a very convenient source of free, niche-relevant traffic.