Just noticed that the reCAPTCHA plugin was sending all comments to the spam folder. I deactivated it and all is back to normal. Was running plugin version 2.9.6 sitewide in mu-plugins folder.
This is a known issue corrected in version 2.9.7
http://wordpress.org/extend/plugins/wp-recaptcha/changelog/
So the answer is to update the plugin. I am just posting here for reference by others who might go to the forums before checking for updates... because I'm a helpful guy.