A single engine aircraft pilot on the PYE1 arrival encountered turbulence at 5;000 FT resulting in a 400 FT altitude loss but ATC was very understanding and replied the aircraft's transponder was not received.

Narrative

I was flying in light to moderate turbulence (for a Cherokee) hearing PIREPS from large and even heavy aircraft to ATC that they were experiencing moderate turbulence (for a large aircraft) below 4;500 MSL over the mountains. I was 5;000 MSL over water on the arrival having requested a visual approach in CAVU conditions; when I first had held altitude in an updraft that necessitated cutting power to idle and nose down at Vno; when the aircraft entered a very strong downdraft that caused me to lose 400 FT before I could arrest the descent at Vy with full power. ATC frequency was busy; but I managed to get in about one minute later; 'NXXX is having trouble holding altitude.' ATC then told me that they didn't have a Mode C report; and asked for my present altitude. I replied honestly that I was now at 4;700 climbing very slowly; but that I had been at 4;600. ATC then offered a higher altitude; but as I expected to be descending soon (and was soon there after) with vectors to my destination; I declined. ATC then told me that they would keep other aircraft away from me. They kindly kept me at 5;000 as late as possible so that I could descend through the turbulence as quickly as possible. I'm pretty sure that ATC did not get miffed at my altitude bust; though it concerned me (I like flying... and try hard to be safety conscious.) I had done my preflight weather briefing through aviation weather.gov; followed by another flight planner when I filed. I don't recall seeing any SIGMETS or AIRMETS that would have caused me alarm. Light to Moderate Turbulence is a fact of life for small aircraft. But; I am concerned that my Mode C was not seen... I've checked it several times since I've owned the aircraft. It's working. It has been inspected regularly. Yet; when I'm in Class B during certain times; the response light is on more than off! I am concerned that with growing popularity of TCAS; that the once every 12 second sweep of the radar misses my transponder because it is already busy responding to another aircraft's TCAS? This could be a safety issue. Will ADS-B fix this?