AT SXW, Google’s Matt Cutts talked about an algorithm update to target the sites which have been overly optimized.
Matt called it an attempt to "level the playing field" between the good and the bad guys of SEO (read quality content and over optimized content respectively).
Matt said, "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."
Here’s the link to the audio clip of Matt’s statement: Listen to Matt's Interview
It is about 1/3rd way in the interview.Matt Cutts: Google Over SEO Site Penalty!,