Link exchange with relevant sites and neighborhood sites are really increase traffic. It can boost your sites ranking in search engines as well and derive traffic also from that sites where your link is present. To find quality sites there many ways but one is best - go through search engines and choose some keyword which do you want to find and the result you are getting from search engine that are quality sites. In spite of there many ways to measure up for a quality site.
Google does not give as much weight to a reciprocal link as it does to a one way link. However if you exchange links with relevant sites, sites that are directly related to your product or service will see results. You can find relevant sites by going to google and doing a search for keywords that are directly related to your site.
kingofsanda gave the best answer I think. When you look around at the SEO blogs that are saying exchanging links are bad, they are neglecting the fact that link exchanges is what the net was originally built on. While a two way (or even three way) link will not count as much in SERP, it's not always SERP you should be after. Swapping links with a high traffic site will bring in some of that traffic...and in the end, it IS traffic that you are after. While you should likely not rely on recip links as your only method of link building, do not discount it. There is power in link exchanges, and if done correctly (like with related sites as mentioned in the quote above) you'll find they are well worth it.
I have noticed that.. in one of my site I have removed my link directory and the adsense earnings reduced from $150 to 70$.... <- because of the reduction in the traffic :-(
speaking about traffic it depends on link placement and traffic of the site where link is placed. and reciprocal links are not as good for PR as one way links, this is obvious