So since the last update of Pidgin for Ubuntu broke yahoo compatibility. There are currently two fixes for the problem:

1) Go through the process of configuring your sources.apt file, and downloading the latest Pidgin client.

2) Make a small change in the current client's Yahoo account settings.

Just for simplicity's sake, I choose (and am going to explain how to do) the second.

SO start with opening up the account manager like so:

Then highlight the Yahoo account and click on the "Modify" button, like so:

A new window will pop up, click on the "Advance" tab on the top left. And then add "cn." to the text area for "Pager Server" like it shows below:

And that is all you have to do, and you'll be chatting with your Yahoo friends again in no time.