Actually it isnt bad at all if you take a break from chess due to not enough time to play.. although its bad if your gone for more then a couple weeks.
Everyone has these bad period of times where they suck at chess and just drop everything.. i would suggest you just take a couple days off from chess or just keep playing and it'll come back to you within a week or 2.
Last time i had this "slump" i played horrible for around 2 weeks and then one day it jsut came back to me and started playing great again!
Dont worry too much about it.
In about April I started making a concerted effort to study more by watching videos here, working through the problems in Yusupovs Build of Your Chess, watching a few opening videos and a few other various things. I don't have a great planned study regimen, but I was making good leaps in understanding...and winning a lot of games.
The last few weeks my rating has dropped over 100 points. I know that we're not supposed to watch our ratings, but I know I've gotten weaker. I'll drop one or two pawns at a time, an entire pieces, etc. I just don't seem to have a knack for the game anymore, and it's frustrating. A few weeks ago I was able to come up with great plans and make some good attacks.
This is a repeating problem for me since I started playing in 2000. I'll spend a few weeks studying like hell two hours a day or so, then all of the sudden something else comes up and I can't put a lot of time in. I'll do something like tactics trainer daily (a few problems) but I still seem to lose a lot of strength and understanding. In the past when this has happened I'll just quit, only to take back up the game a few months later.
Does this happen to other people? If so, what do you do to just maintain a level of ability during a period when you can't devote much time?