As long as the directory has a category suited to your site, they are not charging for you to submit your link then it certainly is a good idea to use the resource as that is what it is there for. But always beware of over doing things. Meaning avoid upsetting your link veolcity as it can trigger an upset for your site.

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Yea, if you want to rank a easy to medium difficulty key phrase and you have a month or two to do it, just submit to a few directories each day for the next month or so, and you will surely see improvement if not excellent ranking.

For the most part, I would agree with this statement. The OP is looking for proof and It is not easy to prove that directory submissions help with ranking. You can not prove it by ranking a page using directory listings alone, since having only directory backlinks is not natural or recommended.

I am convinced that High quality directories can provide direct traffic. I say this because almost all listings in my directory DirMania.org are receiving click-throughs. The directory includes a click counter. Listings a week or two old may not have clicks but older listings do.

Unfortunately, that says zero about how tough of a keyword it is.

I can't agree with 3-way link exchanges. There is plenty of documentation of google being able to detect and penalize larger schemes.

With directories you are getting a one way link, and 95%+ of the time the link is reviewed before approval. Matt Cutts from Google has repeatedly supported the notion that directories with a good review process are fine.

You may be working on very short deadlines. Most of the sites I have worked with we submitted to a dozen or more directories each week for a couple of months and it worked great.

Yea, I think you are right in saying there is an approval process and SEO through directories is more time consuming, but on the bright side, the fact there is an approval process is one of the reasons people like Matt Cutts from Google have said that directories are ok as long as they have quality standards. Most people who submit to directories are thinking in terms of seeing their site continue to rank better in months to come (not weeks).

I don't believe in automated link programs including those for directories. That may be something that works short term sometimes, but I have seen far too many people get burned. There has to be some kind of quality control. I've seen people buy links only to find it hurt their rankings. By no means am I saying that directories are the only way to go. They are certainly not, but be careful with any program that is automated. It CAN hurt you.

Well I have over 8 years experience within SEO and I can tell you that certainly from my experience submitting to directories is a waste of time and effort. Period! You're much better off researching high PR sites within your target market, and offer to do some content for them in exchange for an incoming link to your site. This will be far more ffective than spending time submitting to directories which will just result in a whole lof of spam and little else.

Sorry. It really just isn't worth it anymore. You'll notice that whilst Google used to mention directories within its webmaster guidleines this has been dropped now. So I think you can take that as proof that it really doesn't help much.

Hope thats of help anyway.

Yea, if you are going use that strategy to prove the strength of your argument, you might want to quote some leading professionals in SEO. There are certainly people on both sides of the issue. I chose to quote Matt Cutts.

Hear for yourself:
YouTube - What types of directories are seen as sources of paid links?At no point does he say the size of the directory is important. He instead talks about the practices of the directory:
1. Do they go out and look for directories for themselves?
2. Why do they charge for reviews? What are you paying for?
3. What is the value add?
4. Do they have high standards?

And what he says at the end is what I have been saying:
"If you make a great site, and make sure people find out about it" the traffic will come to you.

But clearly he says that Google does not like "fly by night directories", but refers to the practices that make for a good directory. So it follows that some directories are good both large and small.

Well, then why is it that sites that were only submitted to directories are able to rank?
(beating competitors)

Personally, I've had the best results with both blog commenting and profile linking. In fact, I spend 95% of my time on these two things alone.

However, it's good to have a variety of different types of links so things like submitting articles to directories, submitting videos to directories, creating accounts and submitting posts at web 2.0 sites like Blogger, Squidoo, Xanga etc will all help.

I'm not sure why you stumped. Its one of only 10 billion IM subjects that people disagree on. You came to the wrong place if you're looking for a consensus.

Although, I am truly shocked, as I didn't expect any positive votes, but that's just me.

For backlinks, forum profilies + blog comments, throw in a couple of articles and web 2.0 links and you will be on your way.

Yes, It works but before doing the directory submission find the best keywords for the site.

Directories are said to not be nearly as valuable as they once were, these days social bookmarks are considered by search engines to be more important, due to the number of junk directories designed primarily to attract paid listings. I have seen file servers run by SEO companies containing 100 directory sites, probably all managed by the SEO company. You can find services that will submit a site to 1000 directories for about $10, this sort of directory saturation has damaged their credibility.
Onewaytextlink.com is a free service that will help you semi automatically submit your site to 1371 directories (for a backlink to their site) you can view the list of directories used.

DMOZ is still the holy grail of directories, this human edited non profit site is used by the search engines as a source of legitimate sites. Yahoo's paid directory is still useful for improving ranking, consideration for a commercial listing costs $299.

Sometimes, for directory links to work for SEO the page that the link is on has to be reached by following a path from the home page (not from a search) and also has to be a direct link, not one that uses a click counter for example as some of the ones in the list of directories in one of the other answers have.

Ignore toolbar PR - this is so far out of date that it doesn't count (and I have had pages at the top of searches returning over 100 million results on pages that have a toolbar PR of zero).

Directory age may also be a factor. Many new directories are just set-up on expired domains with pagerank. The old directories that still retain some pagerank over the years could be worth submitting to.

Thanks for the suggestion!