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I had the same experience on a few sites.  Ranked #1 for over a year, dropped same day as penguin, but bounced back the next day.

Kentaro is correct. Google does have a page layout aspect to its algorithm.  The known aspects are the frequency and placement of those ads.  If a page is too ad heavy, or if the ads are placed in a way that destroys the user experience you can rank lower.

If your page looks like this you could have problems:

ads ads ads

ads content ads

ads ads ads

Where do you typically rank for your main location?  How are the searches spread out?  Does everyone just search the main city expecting good results, or do they search individual cities?

In my industry people just search the main city, which is why I ask.

I work with around 50 companies, and that's typically what I see.  My #1 listing will just get changed to a Places listing, but it will still be in the #1 position.

Are you in a major city?  Is your distance going to cover other cities?

Did you check the site function prior to the past few days?  The Google update targeting clustered domains has messed with the site search function for right now.

Anyway, if it isn't being indexed then you probably aren't in any trouble right now.  I'd still work to get the 301 redirects in place, though.

How are the duplicates being created?

Best solution would be to redirect the pages you don't want, but a canonical should be sufficient.

I'd just contact everyone that is linking to that page, tell them that the company no longer sells the product, but that you do and would love their link.  If they don't have any links on that page, then go upstream from there, and try find a relevant page that does have links to it.

How well is the URL optimized?  How deep is the page located?

Is it like miamibelts.com/new-york-belts or is it like belts.com/new-york/new-york-belts?

How many internal links are going to Miami Belts vs New York Belts?

If the searches are taking place right on your site, then I would follow,noindex the search pages.  That way the bots follow to the specific listings, but doesn't get gunked up by all the duplicate search entries.

If the website you are looking at is the one in your profile, then I'd look at improving your content so that it is easy to digest.  Right now you have really long articles that aren't broken down with different headers.  So, I can't quickly scan it to see if I even want to read it.

Anyway, a blog alone isn't going to succeed.  You need to create a social media presence to gain attention for your blogs, and make them super easy to share/like/tweet/+1.  That way they can potentially go viral.

I would look at moving your link profile to include a lot more benign links like your bare url or things like "click here."  Typically people try to stay below 20% with keyword rich inbound links, and you appear to be a lot higher than that.

Anyway, I would look to see if manual action was taken on any page on your website.  Several websites reported getting the warning off an individual page, but many others got it for a site wide penalty.  If you can't find one you might want to move forward with getting more benign links to not be over-optimized.

Google won't confirm anything, and they gave their typical "we do 500 changes a year" response.

You probably have already done this, but do you have any keywords that are more actionable?  Such as "IT Service Reviews?"  I just did a few quick searches for those high level keywords, and they keep producing research based results (i.e. Wikipedia, etc).

Anyway, the best tactic is to take a look at the top 5-10 prospects for your specific vertical, and see what they are doing.  If they you can find a pattern in those title tags, then you can determine your strategy based on that.

Sounds like we need to do a crowd source test!  Someone get a domain, and let's start hitting it with blog comments to see what happens!

I'm a little confused.  Are you guest blogging or leaving comments on a blog?

I have a couple businesses that target major cities, and their suburbs with multiple pages like this, and I've had great results.

For local results they can be worth the effort.  However, in my opinion, you would be better off investing the time and money into content or usability testing.

A couple years ago directories used to be a decent technique for improving your rank, but have since been devalued through algorithm changes.  SEOMoz probably maintains them because they can have an impact in local results as some of them can count as citations.