A kernel panic occurs when the Linux kernel enters an unrecoverable failure state. The state typically originates from buggy hardware drivers resulting in the machine being deadlocked, non-responsive, and requiring a reboot. Just prior to deadlock, a diagnostic message is generated, consisting of: the machine state when the failure ocurred, a call trace leading to the kernel function that recognized the failure, and a listing of currently loaded modules. Thankfully, kernel panics don't happen very often using mainline versions of the kernel--such as those supplied by the official repositories--but when they do happen, you need to know how to deal with them.
Option 2: Reinstall kernel
Reinstalling the kernel is probably the best bet when no other major system modifications have taken place recently.
Now is the time to reboot and see if the system modifications have stopped the panic. If reverting to an older kernel works, do not forget to check the arch-newspage to check what went wrong with the kernel build. If there is no mention of the problem there, then go to the bug reporting area and search for it there. If you still do not find it, open a new bug report and attach those files you saved during the troubleshooting step above.