So I've had this Macbook for around 3 years now and it's always had 2 GB of RAM....suddenly today it dropped to 1 GB. Can someone tell me how this could happen?

~Thanks

Well it might be just that, i.e. one of the memory chips has failed. Try the Apple menu (top left) About This Mac, the the "More Info..." button. On left list, select Hardware/Memory. You should get list of memory chips and their status.