A favorite verse cited as evidence of falldown is Srimad-Bhagavatam 11.2.37,
When the living entity thus turns away from the Supreme Lord, he also forgets his own constitutional position as a servant of the Lord. This bewildering, fearful condition is effected by the potency for illusion, called maya.
No acaryas have explained this verse as indicative of falldown from Vaikuntha, indeed this verse states that this condition of turning away from the Lord is brought about by maya, which is not present in Vaikuntha (Bhag 2.9.10). Proponents of the "Fall Theory" like to equate statements such as "forgetting Krsna" as synonomous with the assumption that we were with Krsna in the spiritual world and forgot Him. Srila Prabhupada however dispelled this misunderstanding in a Letter to Jagadisa Maharaja in 1970:
Regarding your second question, have the conditioned souls ever seen Krsna?
Were they with the Lord before being conditioned by the desire to lord it over material nature?
Yes, the conditioned souls are parts and parcels of the Lord and thus they were with Krsna before being conditioned. Just as the child must have seen his father because the father places the child in the womb of the mother, similarly each soul has seen Krsna or the Supreme Father. But at that time the conditioned souls are resting in the condition called susupti which is exactly like deep sleep without dream, or anesthetized state, therefore they do not remember being with Krsna when they wake up in the material world and become engaged in material affairs.
The understanding that is presented here very clearly by Srila Prabhupada is much different than that interpreted by some-that we were all originally with the Lord in His lila in the spiritual world. In the Cc. purport of the famous Bhag verse (Cc. Madhya-lila 20.117) Srila Prabhupada explains the text of this verse, translated as "Forgetting Krsna" as meaning "When the living entity forgets his constitutional position as an eternal servant of Krsna," and Srila Bhaktisiddhanta Sarasvati Thakura in his Vivrti commentary of Bhagavatam 2.9.35, states that forgetfulness is indirect--the jiva is in a forgetful state, vyatireka buddhite krsna-vismarana ghate. That is, because the jiva is not engaged in the service of the Lord he is said to be in a forgetful state.
