A lot of blogs have been talking about a PageRank update in progress, but if you look under the covers, it really looks like a manually applied update to a set of sites that are being punished. While the majority of these look like they have been selling links, some of the affected sites do not appear to be selling links. You can see a listing of many sites that were affected here on SEOmoz.
There are reports from a couple of the affected sites, Search Engine Journal and Search Engine Roundtable that their traffic has not been affected in any way. Bearing in mind that the PageRank display in the Google toolbar is always out of date, losses in ranking and traffic from Google rankings adjustments would normally occur before a visible toolbar update.
It may be that the purpose of these updates is to make it more difficult for link sellers and link buyers to place a value on a link purchase. The Google tool bar PageRank has been one of the most common ways of measuring a site's value in link sales situations. Perhaps the theory is that obscuring what the tool bar would normally show will affect the text link market.
If this is all that Google intends to do to these sites, I don't think it will meet their objectives. Links can get a value placed on them by a variety of other means. However, I would be very cautious about being complacent about this. Google has demonstrated in the past a willingness to send a warning shot across the bow before taking greater action. For example, many people have seen 30 day penalties (removal from the index) applied to their web site, only to bounce back.
When I discussed this with Matt Cutts, he made it clear that Google uses this approach to provide warnings to webmasters to repent their sins and repair the problems that Google detected. Perhaps this is more of the same. It may be that web sites who continue to leave their paid links up will then be subjected to a greater penalty, such as removal, or a rankings drop comparable to the PageRank drop. Only time will tell us how this will unfold.
As a final note on this update, I have looked over a large number of pages that should have some visiable PageRank when Google next does a general update. For example, this interview with Rajat Mukherjee is listed in the webmaster tools account for the Stone Temple web site as having the highest PageRank for the site for the month of August.
Yet it still shows no PageRank. I have done similar checks on dozens of other pages across various sites that should have had some PageRank changes if this was a general update. No change was visible on these pages. As a result, I believe we are looking at an update that was applied on a manual basis to a set of web sites, and most likely, this was just a warning to those sites.