This problem first showed up for me yesterday and after a few hours it resolved itself and everything was fine.
All my friends said Steam didn't have any kind of update or anything and was working fine for all of them.
What happens is it takes awhile at the "Steam is updating" window (which it normally just zips right through) and then finally gives me the option to retry the connection or just work offline; which is useless with Steam -- you can't do anything offline. xD
Anyways, it's happening again.
This has never been an issue for me.
Sure there were times Steam had some kind of maintenance and no one could connect to the server, but this is different.
Obviously, my internet is fine.
Also, this reminds me, I remember the World of Goo stating that I wasn't connected to the internet either, this was sometime last week.
If anyone knows what the deal is or how I can prevent this from happening.
Oh well, the problem resolved itself as I was typing, but I'd still like to know what's going on because I wouldn't be surprised if this happened again.
Please and thank you. :]
EDiT:
Another thing I forgot to mention, I've been laggy in TF2 since last night too, as well as today, I just got done playing but I was getting an FPS under 20. D:
Might this be related to the unstable internet connection Steam is recognizing? x.x