I decided to deliberately not add or change the content of my site for about a month. I did some small changes here and there, but I did not add anything in terms of new posts or pages. I kept on doing exactly the same in terms of off-site SEO (backlinks, etc); the only thing that I stopped doing was adding fresh content.
I was hit quite hard by the Panda update on the 14th Oct, and since I did not add any content since about that date, I saw a steady decline on the already reduced traffic numbers, directly related to a steady loss in the SERPS for most of my keywords.
Now, TODAY, just about an hour ago, I added a new post of around 1,300 words. I could not believe it when I saw that my homepage, and many of my inner pages had ALL got a massive boost in the SERPS. Most keywords I have checked (for homepage as well as other inner pages) have gone up in the past hour by between 1 and 8 positions. Given I was on page 1 and 2 for most of them, this has already given me a noticeable boost in traffic.
I will definitely start adding LARGE posts from now on, and write as often as possible on MY site, as opposed to on OTHER sites to build backlinks. Will still build backlinks, but for me it is now really obvious how important it is to focus on good content on my own site, more than anything else.
This may sound very obvious to some, I don't know, but I just thought I would share my experience, because it could help some others who are focusing too much on building backlinks perhaps at the expense of their own site.
UPDATE: have found one of my main keywords for my homepage, for which I had been sent to page 39 since the 14th Oct (that is, position three hundred and something!) and now is on page 7. This is a MASSIVE jump that I can only attribute to adding my 1,300 word article, as I had been in the 300 position for the past month without much movement. Goes to show that the power of adding JUST one good article is worth a lot more than building a few high PR backlinks on a daily basis for a whole month.