in my opinion, checking the reason why other websites are in the top position and finding out what key words related to those sites are quite important.
Ranking in google can drop to a variety of reasons. Sometimes it is because google updates its ranking theory, thus improving or dropping your page rank, it can also be because google has decided to lower the ranking of websites linking to you, also some sites linking to you stop, for the best advice, look here http://www.google.com/support/webma...c.py?topic=8524
in my opinion, checking the reason why other websites are in the top position and finding out what key words related to those sites are quite important.
Analyzing where your competitors go and what that are up to will help you cope with the competition.