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Thanks, rolled back to a previous version of the site and still have a same problem.
Cant recall if we did anything different (small team works on site). It was just really surprising when it happened.
The gut feeling is that its a server issue, and that somehow the permission settings are incorrect.
(cache, templates_c, uploads ) problem is it does appear to be writing to cache, but it wont recreate the adminmenu.
Will ask host to check out server logs.
Will let ya know if anything is found. But basically we had been running the site without problem for the past year (and it has been around for the past 5) so it just seemed so odd.