google places went down a place or two alright.It has the website that disappeared connected to it,hopefully theres not bad news ahead and the places start to suffer because of the website been hit...
Your website is still connected to Google local, but your links have are spammy and have no value, it better to have a few good links, as I have seen sites ranking with a few backlinks, I had a site ranking for a low volume search with 2 quality backlinks.
But you will be chasing your tail around in circles, because you have not yet learnt about backlinking, as far as I see it, hompage links are what is working at the moment. Web 2.0 tiered backlinking, forum profiles and spun content, all of this has had its day, now you have to get quality links. They do not come free, thats why there are SEO company's out there, however, our search volumes do not warrant their cost. To get to number 1 I would say it will cost around $2000 then you have to maintain that position, because when you are at the top there is only one place to go, yep down. Your competitors will not take it lying down, competition is healthy, they will up their game plan and it will keep you on your toes.