I know of only one way that this can happen in windows, and has nothing to do with Steam other than their not-so-great decision to install all content into Program Files.
If you are on Windows 7 or Windows Vista, and you have UAC set to ON, then change it later to OFF, this can happen.
UAC does thing evil thing where if a program tries to write to a "protected" area like Program Files, EVEN IF YOU ARE ADMINISTRATOR, when you get a UAC prompt and give permission, it actually writes any files that would normally go into that directory into a "virtualized" directory somewhere else.
If you turn off UAC, that will no longer happen, and as an awesome bonus, it will no longer know about the files that it virtualized.
So in your case, if you had UAC on, installed a ton of games, then later got sick of UAC and turned it off, this would happen as you described.
See the second paragraph in "Features" in the article on User Account Control.
If you have done this and turn on UAC again, your content will come back, but be a TOTAL mess because if you've downloaded more stuff with UAC off, then that will be invisible when you turn UAC on, and vice versa.
this drove me a little crazy once before I realized what was happening.
i'm curious to know if this is your issue.
I've seen this happen often when I put my laptop into sleep mode, and then later start using it again. Sometimes Steam will manage to reconnect itself. When it doesn't, I find I have to close down all of Steam, including its background tasks and then restart the Steam client (which restarts all the background tasks). This always works for me.
Best Answer
This happens to me every time I restart because (due to my SSD) Steam starts up faster than my computer can connect to my wireless network.
You can tell you're in offline mode because the steam-icon in the tray will be red.
To get back to online mode, you open Steam --> click the "Steam" menu in the upper-left --> "Go Online..."
Of course, the real solution to my problem would be to make the wireless connect faster. I've heard success stories from people doing this by updating their wireless-NIC drivers; unfortunately, that did not work for me.