Hi Julia,
The Blog Party forum is one of my mods forums just about their biz or whatever Mikes wants to talk about.
So I moved this question to the general blog marketing and RSS forum.
The answer IMHO is that it's important to have both good incoming and outgoing links - however what's ost important for SEO purposes is incoming links and good targeted directories can help that.
But search engines don't really put lots of wieght on directory links so a more powerful strategy is to get inbound links from high PR blogs in your category. You do that by having GREAT content that other blogs in your industry will want to link to. You also do it by adding significant industry blogs to your blogroll, hoping they will link back. So now we're back to the importance of blogrolls!
What do you guys think? TELI? MIKE? STEPHEN? Where are our blog gurus?