"Link wheel refers to a series of links pointing towards the next link in the series and each of the links in turn pointing towards the Money site. Linkwheel is made of taking web 2.0 property and these web 2.0 properties are inter-connected through the contextual links." (source: ribbun.com)
Just to add to earnnet's explanation, sometimes you can include other types of links (social bookmarking for example) and then link those link wheel properties from there. In this case, you are trying to bring more authority to those pages linking directly to your money site. This is why link pyramids are fairly common too.
A link wheel basically is a process in which you build a dozen or so new blogs/web pages using web 2.0 properties such as squidoo, blogger, hubpages and etc, all on the same topic as your main blog or website. Then, on each of these mini sites, you write one (or more) unique quality article that includes a link to your main website or blog and another link to one of the other new blogs you just built.
i think link wheel is good for the page ranking and traffic. its good tool of back linking. basically i use web2.0backlinks (dot) c om for link wheel.