SSMS fail to connect localhost SQL Server 2008 R2 suddenly
If it's a named instance well, then, you should have always been using localhost\instance. This is how it's supposed to work. You shouldn't have been able to connect before and I suspect there is a vital detail missing that would explain that. 

Possible explanations (there may be others): the instance was the only one on the machine, and maybe an alias was set up or it happened to be running on port 1433 or the browser was able to redirect to the instance. The alias has since been removed or the service has been restarted and/or the instance is for other reasons (such as a manual config change) now on a different port or the browser service has been disabled.

In any case, the solution is to update your connections to reference the full path to the instance, namely: localhost\instance or as Kin suggests make sure the instance is hard-coded to run on a specific port and then use localhost,&lt;port number&gt;.