It's getting more towards companies focusing on SEM
It has been for years, so am surprised its just being mentioned on forums and blogs etc. It used to be you could SEO your main keyword and do well, then it went to:
it takes 8 keywords to rank for
,
now you need at least 25 keywords, which are likely all long-tails which just don't work that well.
To rely on just SE free rankings and think the traffic will pour in, IS a bad, bad idea

The results pages are controlled by the SE and they can say what you'll get, and nothing you can do about it if and when you are dropped. Now as stories flood in about
-
more ways to stand out are required.
I think the problem is too many just did SEO, many dont have the cash to buy links or PPC, and no other options available to them. This with the SEO cowboy consultants, the dreaded link spammers, the cheap knocked out content spam - Google sat up, took notice and killed loads of sites off - and can see why they did this. Google wants a 'clean web' - except they will never get that as the web is overloaded with spam junk.
Come-on, what did people think was going to happen... Obviously the SE's must be careful about their controlling, as could affect advertising revenue in theory.... - but their banning and penalising seems to be working for their benefit, and not for websites.