How effective is directory submission (free &paid) as link building strategy (to get good PR) and site/blog promotion? Any insight will be greatly appreciated.
Don't expect to get good ranking by just submitting to directories especially in competitive niches. Don't expect direct traffic either. But directory submissions will increase your PR and help a little bit in SEO. Directory submission is still a good way to diversify your link profile and get hundreds of backlinks from different IPs.
Mix directory submissions with other link building strategies. I have seen good results from free directory submissions.
you will get back links but submiting to thousands of directories will not help you.......most FFA directories do not help you in promoting your website but they are only made to collect a vast database and then sell the same......so only submiting to some hundreds of directories will help you increasing your PR. talking about paid directories..........there are many paid directries but there are only few which are useful or highly ranked..........dont forget Yahoo directory..........
You can get to a PR3 with just free web directories, but you'll have to get other links to get any higher. Their value is that you can set the anchor text yourself. I've used web directories to boost a keyword from page 2 in Google to page 1. Niche directories will usually give you more SEO benefit because the site will be more closely related to yours. However, as zexy and jitendraag stated general web directories help you show Google a "well rounded" back link profile. It will give you a bunch of one way links that will offset reciprocal links you've traded.
If I will list down all the typical link building methods, I will put it 2nd to the last in terms of effectiveness.
I would suggest to get a backlinks from high PR sites that will deliver what you are looking for, and make sure it is dofollow. If it is in your niche it is better and if it is in your targeted keyword, it is much more better.
quality directories like DMOZ and Yahoo have helped some of my sites with higher ranking. submitting your site to free directories can make a difference if you submitt to a lot of them