Why does my iPone suddenly have horrible battery life?

Try turning off applications running in the background. A little known (at least it seemed that way to me) function of the home button is that if you push twice a tray will pop up on the bottom of the screen with four apps. Swipe and you'll see all the programs that are running or at least loaded. Long hold one of the icons, they begin to "vibrate" and you (confusingly) get the delete button in the upper left of the icon. Click on it and the icon disappears. This doesn't delete it, just stops it from running in background. Some programs do more - drawing battery, slowing internet connection - while running in background than others. Some load with startup, some just stay there once you've opened them. Worth trying.

In my experience, iOS 6 caused an improvement with battery life, and it supposedly fixes some battery-life related bugs from iOS 5. It may or may not solve your problem. What I have done in the past to track down battery issues is to run Apple's Instruments app, which is part of XCode, and connect it to the iPhone and see if anything is using excessive CPU. This is how I tracked down a batter issue that turned out to be T-Mobile's Bobsled app going bonkers. You might need a paid Apple developer account to use it with an iPhone, though, I'm not sure.

Have you enabled the "Ask To Join Networks" setting under WiFi settings? I had dramatically better battery life once I disabled that feature.

Yeah, this is almost certainly a change in either network settings or network environment that the Phone is running down the battery using a radio at max power. Try throwing it in airplane mode and see if the battery does its dropping, if you have time to experiment.

Note that if it is your battery, you don't need to replace the entire phone. I replaced my wife's 4s battery this weekend and it was quite easy. Turn off, remove sim card. Remove 4 screws. Pry/lift up old battery. Insert new. Close up. There are many videos on youtube you can follow step by step.

I have noticed a sharp drop since I downloaded iOS 6. I downloaded the app Carat to try to figure out exactly what is causing it. So, try downloading that app. It takes about a week for the data to be analyzed.

I was having the same problem a little while ago. I did what RandlePatrickMcMurphy described above first, then restored my iphone through itunes. One of them worked and it's back to normal.

Seconding Instruments. When I ran it I was surprised to find the Location Services daemon (locationd) eating a bunch of CPU, even on a fresh restart. If you go to Location Services in the Settings app and scroll down to System Services, you can turn off a bunch you don't need, and that fixed it.

Something similar happened to me a few months ago on a 4s; I was going crazy trying to think of the most recent updates I had made and experimenting with airplane mode (yes, it saved battery life). Eventually I mentioned to someone (who happened to work for Verizon) that my phone had been acting up and where I usually only had to charge it once a day but that it felt like it was spending more time on the charger than in my hand. I might be botching the explanation, but basically, he told me that because we weren't in a big city my phone was having to work harder to find the 3G signal than it would if I were at home (big city). Of course when I returned to the city, my phone was back to "normal."