I had a site with a Page Rank of 3 when suddenly it went down to 0. I didn't get any notice of a warning or penalty so why would this have happened? Does anybody have any explanations?

You may have to look back with a critical eye on your SEO efforts, and see which ones may be overdone. Or maybe it's the other way around, and you lost a main source of link popularity juice.

Personally, ever since I had the same thing happen to me (and still retained most of the high search engine rankings, I don't pay too much attention to PageRank). It only hurts when you're trying to exchange links, but I don't actively do that either for quite some time now.

You should check if the IP on which your website has been blacklisted by the SE. If you are hosted on a shared server, there is a single IP that is shared by all the accounts hosted on the physical server. If any of the account/s are involved in spamming, other websites too have to pay the price. It is always suggested to have a dedicated IP assigned to a domain to avoid such situations. You must try to add fresh content to the website, and after a week of two check if the content is getting indexed in the SERP.
Though this is just a possibility. There might be multiple reasons for such a change. One of those is as mentioned by ldcdc. You must get your website reviewed from an SEO expert.

Well said. It is a must to get a dedicated IP for your domain so you do not pay the price of others.

Not always true. See this from HostGator support

Well quoted Steve-Hostirian.Thats right, incase someone indulge into spamming sending out spam E-mails the would surely get blacklisted, but it has nothing to do with the search engines blacklisting the IP.
Here in kashirakaze's case the situation is regarding the SE ranking issue.

I hate to say it but that hostgator response is wrong. You can create a mail service for a specific customer and bind it to their static ip. But, I have a static ip for my site and i have been PR 3 then 0 then 3 then 0 again so im about to contact google and see what the issue is. Beware of link farms as that can get your site blacklisted in regards to PR and I think that is what happened with mine.

Many site's PR dropped recently because Google caught them buying links to increase their PR.

OUCH!

Trace back all recent changes in your site, if you think nothing will affect your pagerank then check you links. above explanation and comments will help you.

good luck!

also try copyscare to check is there some duplicate content website.
anyway page rank is past..trust rank is future

As stated by bobchrist, due to the latest updates in the algorithm, many websites have paid the price of low ranking. actually there can be varied reasons for the change your site has incured. It would be tough to judge the probable reason for the damage.

But as far as I assume this might be because of some unlawful practice carried out through the server that might have done the damage.

Yes, when the page rank suddenly dropped from 3 to 0 it indicates that google has penalized the site.

I don't think the Hostgator response is necessarily wrong, as that is stated as their policy.
Link farms can create problems with Page Rank, but that doesn't affect SERPs directly, as LDCDC pointed out with his website.

The same happened to my tech site. I believe this happens when our backlinks suddenly fall. I saw that there was sudden reduction of backlinks. This could be because other websites hosting your link might have closed down or removed your link. Achieving a good PR is easy, but maintaining it is tough.

Or there might be chances that the backlinks pointing your site are devalued overtime.