And it's not just the phrase "web design" that's affected either. The terms "search engine optimisation (SEO)", "web marketing", "web development" and a plethora of other terms have ceased to show related local businesses. The whole industry has been pretty much wiped.
Fortunately for me, the changes don't affect me too much as most of my projects come from word-of-mouth and I still rank fairly highly in the organic results but I know of a few web designers out there that rely heavily on their Google Local ranking and are beginning to panic a little.
I know of no official response from Google as to their reasoning behind these changes, but we can always speculate :)
Ally Lennon of Big Orange Planet suggested that maybe Google is intending to offer services in the web design and marketing arena and is snuffing out the competition beforehand. I think his comment was a little tongue-in-cheek and he was quick to reject it himself :)
On the Google forums, djole suggested that perhaps it was Google's way of increasing revenue:
"Local business results place was getting their attention and they ware clicking on the LBR always now they use the paid results."Whilst there may be some truth in this, I think the reasons are far less sinister. I'm guessing Google are experimenting with removing the local search results from organic search, and are using web developers as their testbed. As an Inernet company, Google know that web developers/designers/marketers are far more likely to notice any changes to search and send free feedback to them - slightly similar to the way they are using web developers to BETA test Google Caffeine.
Whether this is, as djole suggested, to increase Pay-Per-Click revenue or if it's simply to improve search results, we'll probably never know but, if Google get the desired results, I'd expect local search to be removed from organic search results for other industries too. Similarly, if Google don't get what they want from, I'd expect local results for web designers to return.
In the meantime, without an official response from Google there's very little anyone can do about it, so we just have to sit tight and see what happens - but it's always nice to speculate :)