I totally agree with Marie. First and foremost, be calm. Don't freak out and start changing a whole bunch of things. Make sure your client knows what's going on. Far better for them to hear it from you than discover it on their own. Make a plan. First, document everything that has recently changed. Hopefully you've done that already. Start with that 301 redirect. You already know it's a problem, whether it's caused this or not.
Has anything else changed? Meta tags, specifically title tags? I have seen a site drop from a #1 branded search position and disappear for up to a day because the title tags were updated. Then it reappeared back in it's original spot. It's possible that your clients site is in a Google dance, but my gut says that's not it. Start with the 301...and while you're at it, check and make sure that the non.www version of the homepage is properly redirecting via 301 as well as any other potential URL versions that also produce the homepage and that may have inbound links.
Good luck and please let us know what happens. Hang in there!