Affect of Directories On Your Ranks in Google

I've spoken to several google search engineers since I moved out to the bay area. I think the most important thought you can have is that Google's main goal is to deliver the best search result for a query. It is your job to make sure your page is worth being seen in the search results. If you own a directory, you should make sure that you have worthwhile categories and even additional content that is valuable to people like articles, maps, tools, or anything else that will make your directory/site worthwhile.

As far as penalized for submitting to directories, this is unlikely unless you do something massive that would draw attention. Steer clear of "Submit your site to 10,000 directories for $10". Instead, do some of the submitting yourself over time. It does still help you get placement in the search results assuming you have a worthwhile site to visit.