At South by Southwest this year, the ever helpful Matt Cutts made that announcement that Google would soon be penalizing sites that were too heavy on SEO. This is being done to ensure a better experience for their users.
This is now known as the over SEO penalty. No one is exactly sure when Google will be implementing this new penalty, but there have been grumblings of some sites losing their top rankings shortly after Google rolled out an update to their Panda algorithm a couple weeks ago.
Here is specifically what Matt said during his talk at SXSW:
What about the people optimizing really hard and doing a lot of SEO. We don’t normally pre-announce changes but there is something we are working in the last few months and hope to release it in the next months or few weeks. We are trying to level the playing field a bit. All those people doing, for lack of a better word, over optimization or overly SEO – versus those making great content and great site. We are trying to make GoogleBot smarter, make our relevance better, and we are also looking for those who abuse it, like too many keywords on a page, or exchange way too many links or go well beyond what you normally expect. We have several engineers on my team working on this right now. - Matt Cutts
From a user experience perspective this will be a great help to those of who counsel marketing professionals that the best interest of users should always be the top priority.