No one knows what is causing the problem, although I suspect it will be something rather mundane like a power outage or coffee spill. These kinds of massive site-outages (Youtube and Yahoo! I'm looking in your directions) are usually associated with high traffic, but noon on a Thursday seems an unlikely time for such a rush.
If you look at the Team Fortess 2 player stats (http://steamdb.info/graph/440/) you can see that there was a small (30 minute) disruption of service about 1 hour before things went totally black. Whatever the problem, it appears that it was not fixed in time, or perhaps the instability is all the result of some deeper issue. In any case, the last time Steam was down like was in October.
When I started writing this article only some chat and community functions are up, as well as the Steam Store. Now, everything is down except the database
You can check the current status of steam services at http://steamstat.us/ and http://www.issteamdown.com/