Hi Gina,
I am not sure why exactly you were ranking well for those keywords. But the reason that you are not ranking well could be because of either one of the below factors or because of a combination of both:
(1) Your competitors got smarter and started tweaking their SEO and Google started noticing them now and gave more weight/authority to them for those keywords.
(2) Google had some updates/changes in their Algorithm and now they see you as an authority for the keywords "Fat Eyes" and less as an authority for the keywords you were targeting. Basically this means that even though you were trying to target your keyword, you were inadvertently optimizing your website for the word "Fat eyes" through your external and internal SEO strategies.
Basically you've utilized your website for the term "fat eyes". When you type this word in Google you are first among 339,000,000 results. That is awesome. You have gained such an authority for that keyword among that many competitors...Unfortunately, for the wrong keyword. So, use the same tactics you've using but this time build it up the same way with the keyword you are looking for. Just take a look at your competitors for the keyword that you are looking at and do a competitor analysis.
Do an in-depth competitor analysis and find out why they are ranking for that keyword. And then do your external and internal SEO based on that.
And, keep on adding more and more relevant pages. Google likes it when your website is active. And that is why it is even more imperative to have a blog and write genuine posts that include your keywords.
Yes, I understand that On-page SEO matters and that you were getting a good grade from SEOMoz for On-Page optimization.But, that only means that each page you are looking at is utilized for a keyword. It does not mean that one particular page is getting all the credits for a particular keyword. So you are confusing Google. Which page will Google decide to show when you yourself are not telling them that which particular page should they be showing among all your pages, when someone types for that keyword? To be more specific...If you've so many pages that are uniquely utilized (I repeat, uniquely) around a keyword (Around a keyword in a unique manner so that even though each page talks about a keyword topic it still talks about it in an unique manner) and then if these pages pass on the credit to a main page (which is the authority page within your website for that keyword) with the right internal anchor texts then Google knows that, that particular page is the main page with all the credits flowing in for that keyword from within your website.
Let us look at your website example for the term "web design santa barbara"
When I type into Google: site:fateyes.com "web design santa barbara" the first page it shows is: fatyes.com
Second page: http://www.fateyes.com/web-design-santa-barbara-or-santa-barbara-web-design/ - shows 404 <--- This itself you need to take care of
Third page: http://www.fateyes.com/on-target-web-design-santa-barbara/
So, basically in Google's eyes the page which is the first authority for that particular keyword term within your domain/website, is your main page: Fateyes.com
So with that in mind let us see how much weight you yourself are giving to that page from within your website and how much relevance you are giving to that page for that keyword.
http://www.opensiteexplorer.org/links.html?page=1&site=www.fateyes.com&sort=page_authority&filter=&source=internal&target=page&group=0
As you can see SEOMoz's OSE shows you have just 1 internal link (Well 2, but one of it is coming from that page itself) and that too with no anchor text which is really surprising. If this is your main page as well your home page there should be much more just like your main online competitor ndic.com has done.
So, let us look at ndic.com:
On Google when I type site:ndic.com web design santa barbara, the first page shown is their main page ndic.com. So, in their case as well Google sees that page as the main page utilized for that keyword.
Now when you use OSE and check their internal links to that page it shows 221 internal links point to the main page ndic.com ...even if most of its anchor text is "Home" the links come from internal pages that has "web design" in their URL and from pages that are related to web design, web development etc.
Also, the second result page (which Google displays for the search site:ndic.com "web design santa barbara") links back to their home page, with the anchor text "web design" inside the article on that page. So, clearly it shows that their internal linking structure is done in such a way to optimize their home page for that keyword.
Now, you can clearly see the difference.
Another worry is that if you do a search on Google site:fateyes.com it just shows "Fat Eyes" on the title and is not showing the other elements in your title. Google is ignoring it and feels that your main page is more aligned toward "Fat Eyes" But yes, if you specifically type site:fateyes.com web design it shows the other elements, because you are specifically typing it. But it is not good that Google is ignoring the major keywords in your title when you type site:fateyes.com
For websites that are utilized for the right keyword even if you type just their website name for eg:- site:seomoz.org Google will show the other elements like: SEO Software. Simplified. | SEOmoz
Basically, your on-page SEO is not properly optimized and you need to take look at your site architecture as a whole (including internal linking factors), not just the keywords on the page. Also, optimize your Meta Title Tags and content with SEO best practices and use a tool like Woorank to see other SEO Issues along with using the SEOMoz tools and other such good SEO tools including WMT.
Now as far as the Off-Site SEO goes:
As you can see Google is now seeing you as an authority for the term "Fat Eyes". So, now moving on from On-Site as to why this has happened, let us look at the off-site SEO.
If you explore your inbound links you can see that most of your anchor texts from the external links are "Fat Eyes". This could not have been a problem if all or most of the websites that were linking to your website with the keyword "Fat Eyes" were websites or pages that were talking about web design OR webdesign santa barbara OR web development or terms like that. But, since you are a web designer your clients are wide and varied and are not necessarily passing on links to your website from a page that is concentrated on such relevant terms. So either you could've used "Fat Eyes Web Design" or such branded keyword terms OR simply could've linked to you with the variations of the term "web design".
For example on one of your clients www.casadelherrero.com/ website it says: Site Design + Development: Fat Eyes
Since the website Casadelherrero is not about webdesign, they should've been more specific in the anchor text. For example: Why they say "site design" ? why not "website design" ?) OR they could have said: Site Design + Development: Fat Eyes Web Designers (Thus it gives you the keywords as well as your brand name).
Again, if you do a competitor analysis using OSE, on the same - For example, your major online competitor (For the keyword "web design santabarbara) ndic.com, it shows that most of their 29,250 external links have anchor texts such as "Web Design Santa Barbara" "Web Design Ventura" etc. Basically the external linking anchor texts are utilized for those relevant keyword and its variations.
And in your case most of your 1703 external link anchor texts says "fat eyes" or "site design and development" etc. (Just to repeat what I said earlier above, why "site design" why not "website design" or "web design"?)
So, as I said earlier Google now sees you as an authority in "Fat Eyes". What you need to do is go about the same way you did (inadvertently) for the term "fat eyes" and also to keep on dynamically working on your internal seo structure (Internal links, creating authority pages within your website for a specific keyword,
Also keep on doing competitor analysis on your online competitors for a particular keyword and keep on updating your website by taking inputs from those analysis and also look at their Local SEO tweaking/listings etc.
I am sure that you'll get back there and anyway you have experience in tweaking your website for the term "fat eyes". So, you just need to change your targeted keyword and start working on that.
Also, since Google is constantly updating their Algorithm make sure your link building process is in line with it:
Use branded keywords like:
fat eyes website design
website design by fat eyes
And others like:
web design
web designing in santa barbara
santa barbaras best webdesign
creative web designers
etc.. Basically be natural and diverse
Here is an article that might help you in that process:
http://www.stateofsearch.com/penguins-anchor-text-and-headaches-what-do-we-do-now/
I know I've written a very long comment. But since I had some time in hand and since I could hear you "sigh" lol...I thought I might as well put these things out here. All the best to you.