The State of Search Engine Optimization: Google Panda and Quality Web Sites

What is the current status of search engine optimization here in April 2011? We have just gone through yet another highly publicized Google update called the Google Panda update. Do you need to spend a lot time making all sorts of changes to your web site? Or do you just need an SEO Audit in order to make sure that your web site is on the right track and adhering to SEO best practices? What is the state of search engine optimization?