Before we begin, here are some points to note on directory submissions:

1. Budget : How much you are willing to spend on submissions and whether you are looking at free or paid directories.

2. Purpose : Your main aim is just to increase your site's Page Rank or to drive traffic to your site or both? Or is it for prestige and brand awareness? In fact, most directories won't provide you with decent traffic, even big and popular directories Yahoo! or Business.com or Microsoft bCentral Small Business Directory may not increase your sites' traffic much. The biggest benefit you can get from directory submission is for Search Engine Optimization (SEO) purposes.

3. Planning : Yes, this is the most important part of your link building campaign through directory submission. You need to spend a lot of time knowing which paid directory to submit to and how to submit your site to, what anchor text and meta tags and keywords to use and what type of niche or market you are looking at.

4. Keywords: For SEO reasons, you should figure out which important keywords (and some secondary keywords) to use when you do your site submission. Do this part before actually submitting to directories.

Important points to note when submitting to directories:

1. Make sure you read the Terms of Service (TOS) and understand (as well as agree) the terms.

2. Always submit to the correct category (if not possible or if the category is too crowded, something similar).

3. Make sure your description is correct without any spelling mistakes.

4. I would not encourage you to do reciprocal links (or 2 way links). It is too troublesome and may work against you if the directory is blacklisted by Google. If you must, try linking only to big directories or reputable ones. You should also do some research on the directory you would like to do reciprocal links with, checking whether the directory is listed in Google (and a decent PR) and how many backlinks it has.

5. Vary your anchor text (title) so that it will look natural to visitors and Search Engines. Avoid spammy sounding titles. And remember to add some important keywords into your title whenever possible. Anchor text is extremely important for SEO, so make sure your title is proper though out beforehand. Most directories do not allow you to change your title once you have submitted.

6. Vary your description you submit to directories a bit to make it natural to Search Engines. And do sprinkle some keywords into your descriptions too. But do not make your description out to be a listing of keywords! Your description should also be alluring and interesting to the readers and editors as well. Do provide different descriptions of different lengths because some directory limits the amount of text for the description.

7. Check out the category which you plan to submit your site to. If it is too crowded it would be better for you to source for an alternative category with less listings. Another point to note is for you to see how many links does the directory has per page. A good directory should not have too many links per page even if the category itself is crowded. Sometimes smaller directories with less links can help more than a big directory with tons and tons of links.

8. Choose a local or a regional directory if possible, as these will at least give you a better amount of traffic as well as PR. In my opinion, local directories will also help you rank better for regional searches.

9. Niche directories are better : Just like a local or regional directory, they are better targeted and usually have less listings per category. Niche directories have the added advantage of "being in a community" and a resource for a particular topic or subject. Getting listed on these directories can help you get into these "comunities" much easier.

10. Check the PR value of the directory and it's category page (the one you are planning to submit to). Some directories have a high PR for it's mainpage, but very little PR for it's category page. If so, the flow of PR will be limited as well.

11. Ensure that the directory uses static links instead of javascript or those weird dynamic links which do not pass PR and will not benefit your site in Search Engine rankings.

12. Paid directories value. Well, this is a difficult question to answer. It all depends on you and how much you are willingto pay. Some paid directories gives your site prestige and enhance your online presence. Some are indexed very often by Search Engines and these can help you in Search Engine rankings. Some merely have high PR. Some are just there and doesn't really provide any value to it's users.

13. Deeplink if possible. For SEO purposes (Search Engines will find it suspicious that all your external links are pointing to your mainpage), you should always try to link to your internal pages because you won't get many chance to do so in other sites. Note that a lot of directories don't allow deeplinking. But some directories allow you to submit both your mainpage and your internal pages to different categories.

14. Featured/Sponsored listings. Again, this is another grey area. It's in my opinion that you should only go for a featured listing if your category is populated with too many other links. Having your site as a text ad on the mainpage of the directory (or any website for that matter) would be of a better value. Some directories have this "express approval" system, where you pay for speedy approval (like 1 or 2 days time).

Do not be afraid to submit to free directories. Its free so just submit to them even if they don't have any PR. Every bit helps and you will not know whether in the future their PR will rise and this can certainly help improve your PR as well. Just try to avoid link farms (directory with tons and tons of links per page) as they are useless and seldom get indexed by Search Engines at all. Also ensure that they have static text links because some dynamic links(especially those which looks like session ids) or "weird" links won't push PR to their listed sites.