I just found some threads on forums stating that Google removed from the Webmaster Guidelines Page the 2 lines referring to directory submission and incoming links:* “Have other relevant sites link to yours.”
* “Submit your site to relevant directories such as the Open Directory Project and Yahoo!, as well as to other industry-specific expert sites.”

For more details see the forums discussions: DigitalPoint Thread, Google Webmaster Help.

I think that directories submission is one of the myths that are sustained by the directory submission services seo companies. At this point there are thousands of directories. From those only a few has a good page rank and only 2 of them I consider important:

• ODP - Open Directory Project (dmoz.org) - a directory maintained by volunteer reviewers, where a website might be approved for listing even after 6 months after being submitted.The main advantage of the open directory project was the fact that many directories are based on it and a link published in ODP can generate many backlinks. The ODP was usedby google to rank websites.
• Yahoo directory - a paid directory which is not cheap (299$ a review fee + 299 recurring annual fee if accepted for listing).

IMHO the google move of ignoring directories is to a certain degree the correct one, because the directories are not used by potentianl visitors to identify the sites they are looking for. I just took a look on Alexa and here are a few figures I consider important:

• The number of visits to ODP gets lower and lower. In one year it went to 30% from the last time when checked.
• Some other notable fact is the percent of ODP visitors are going to editors.dmoz.org. So 12% of the trafic is made by visitors.
• Compared to digg.com only a small number of visitors are using ODP.

Considering all those is obvious that ODP is not used by so many users and that those days people are using other ways to find what they need. ODP moves to slow to review new links and for this reason google tends to give a better weight to social bookmarking sites like digg.com

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