A client of mine recently had their website hacked by someone who put invisible code on the sites homepage with links to other sites. Google detected this and reported it in the clients Google Sitemap account. The site did get removed from the Google index but was added back with no loss of rankings within 48 hours.
I had to remove the offending code and replace the pages and then had to request reconsideration from Google. The notice they sent said the site was going to be removed for 30 days but luckily it was back within 2 days and Google was very helpful during the process.
It's hard to say how this happened but the most likely scenario is that someone got the FTP login name and password. Its important that you use a reputable webhosting company and that you make sure to use a good password for your FTP account. Its not a bad idea to change this on a frequent basis. Its also important to have a Google sitemap account setup for your site, this way Google can contact you quickly if it sees a problem with your site.
i really feel for you. google is so hard to deal with sometimes.
Yea they actually came through and got the site back up and running within 48 hours, Go Google!
actually, its much more likely that your WP software got hacked. WP isnt very secure. i use WP and have been hacked before , similar situation – they added links to my blogroll. do a google search for preventing wordpress from getting hacked.