Normally Skype’s peer-to-peer network has an inbuilt ability to self-heal, however, this event revealed a previously unseen software bug within the network resource allocation algorithm which prevented the self-healing function from working quickly. Regrettably, as a result of this disruption, Skype was unavailable to the majority of its users for approximately two days.

The issue has now been identified explicitly within Skype. We can confirm categorically that no malicious activities were attributed or that our users’ security was not, at any point, at risk.

This disruption was unprecedented in terms of its impact and scope. We would like to point out that very few technologies or communications networks today are guaranteed to operate without interruptions.

We are very proud that over the four years of its operation, Skype has provided a technically resilient communications tool to millions of people worldwide. Skype has now identified and already introduced a number of improvements to its software to ensure that our users will not be similarly affected in the unlikely possibility of this combination of events recurring.

The Skype community of users has been incredibly supportive and we are very grateful for all their good wishes.

Hey, at least they're being honest about it!

Original post found here:
http://share.skype.com/sites/en/2007/08/what_happened_on_august_16.html