Matt Cutts is Googles main man when it comes to advice in SEO. For anyone who is deaf or hard of hearing below is the transcript of what Matt Cutts has to say on this topic:
'Today’s question comes from Jim. Jim asks regarding hidden content, my site has a 'Read More' dropdown window to coexist with the simplistic design elements. The box contains optimized content, keyword anchor text linking deeper into the site, etc. Will I be penalized for this? Alternatives? So here are the things to be aware of.
Number one, let’s sketch out the bad side first. So if the bad side is so your dropdown is 1 pixel long and 1 pixel deep and the thing that gets revealed when you click on it is 8 pages filled with keyword stuffed anchor text and things like that, that’s going to look pretty bad.
If however you are fitting within the normal idiom where you have a navigation menu and you click and is revealed may be a paragraph or two, may be a link or two, that is the sort of thing a lot of websites do, so this is the sort of thing where I would pay attention to what other websites do.
If you use a common framework to do your dropdown that a lot of other websites use there is less likely hood that we might accidently classify it as hidden text and then it would also really not be a good idea to put 8 pages of content in the stuff people don’t normally see, because what you want people to see is the same content that Google bot is seeing.
You don’t want to land on a page that has nothing on it and have a whole bunch of text hidden behind a drop down. But most normal mouse activated drop downs are doing a completely normal amount of stuff and that’s the sort of thing I wouldn’t really be worried about as long as you stick to common idioms that most sites do those sorts of drop downs, as long as you keep it to a relatively normal length of text I don’t foresee any problems.'