As I said before, this is really starting to become a big, big PR problem — although some advertisers and SEMs argue it's a real problem. Coverage from Wired on the issue follows on the heels of recent WSJ coverage from Kevin Delaney.
There are two big problems: existing and potential PPC advertisers losing confidence (especially SMEs) and stock valuations taking a hit. The latter would be the result of the former or anticipation of the former by Wall Street analysts.
The engines/paid-search networks are going to have to go public soon with a strong PR push (and evidence) that they: a) take the problem seriously and are b) vigilantly and diligently protecting the integrity of the system and their advertisers' interests.