how many of you runs directorys without sub categorys ? and having main categorys like Entertainment, Health, Shopping etc only or do all use subcategorys like this Entertainment - Books - Celebrities - Humor - Movies
Using subcategories is much more better imho. you have more pages in your site, sites are organized better because of more specific topics, resulting in less sites per category/page. Also it's easier to find specific sites for the users.
Without alot of subcats, your directory will become all but useless after a week of submissions. Why would I submit a site to Business, Shopping, or Internet where I will be listed amongst 500 other sites and probably be on something like page 27. The more cats and subcats the better.
im in the process of creating a niche directory type site.. I have category, sub category, and a second sub category which gives me a lot of control. Most things will fit into the second sub category with a great degree of accuracy. for instance my company is an insurance broker, which is totally different from a insurance provider.. Anyhow my it should be something like business/insurance/insurance broker accuracy is key. If you think people will ever browse your directory you need to have a search, and a good category system so people can easily find the specific area they need. Even if only SEO's and webmasters are going to yor site, you want them to find the correct area right?