It looks like Matt Cutts has created quite a stir with his Indexing timeline post. At the time of this writing, there were 156 comments.
In Matt's post, he outlines the timeline for Bigdaddy, Google's latest indexing/crawl algorithm. It appears a lot of people are upset because their pages were dropped from the index. After looking at the example sites given by webmasters, Matt concluded the primary reason was because Google's algorithms had very low trust in the inlinks or the outlinks of that site. Examples that might cause this include excessive reciprocal links, linking to spammy neighborhoods on the web, or link buying/selling.
Here's an interesting blurb from Matt (I strung several quotes together):
"As these indexing changes have rolled out, we've improving how we handle reciprocal link exchanges and link buying/selling. If you were getting crawled more before and you're trading a bunch of reciprocal links, don't be surprised if the new crawler has different crawl priorities and doesn't crawl as much. Some folks that were doing a lot of reciprocal links might see less crawling. If your site has very few links where you'd be on the fringe of the crawl, then it's relatively normal that changes in the crawl may change how much of your site we crawl. And if you've got an affiliate site, it makes sense to think about the amount of value-add that your site provides; you want to provide a reason why users would prefer your site."
A lot of people were upset about this and part of it seems to be a misunderstanding of what Matt was saying. People (myself included initially) seem to think Google will penalize you for reciprocal links and buying links. My understanding (now) is that Google will not count reciprocal/purchased links to your site. So, if that's all you have pointing to your site, most of your pages will not get indexed. but if you have some reciprocal/purchased links, but also a lot of "quality" links pointed at your site, your site could still rank well.
One point I'm still confused about is selling text links on your site. Bigdaddy will not reward sites that purchased links, but what happens to the sites that sell them? Matt seems to suggest that the sites that sell links may see some drops in the number of pages indexed. But I know of two very popular sites that sell links and they seem to rank very high. The sites do post quality content and I can see why Google would not penalize them. So my take is that very popular sites or sites that Google trusts appear to be exempt from this penalty. But if you don't have a very popular site or if your site is not trusted by Google, you can expect to see some of your pages dropped from the index.