Several people claim that directory submission still works, helps a lot in SERPS. I've noticed that those link from directories are mostly PR0 links from sites which are attached to a lot of bad neighboors and BadRank, DistrustRank propagation will mark directories as bad. So generally those links are from sites with poor (TrustRank-BadRank). It could be 100 PR0 links and few links PR1-PR2 usually. As I've written in my article about fighting link spam, those links will have bad PR distribution so several link spam algoriothms could mark your site as link manipulator. BUT, there are theshhold. Google and others don't want to mark site as SPAM only if for example it did Press Release with whom it got 500 poor quality links. So, there are some tolerance probably if you have less than 1000 links or something they will not calculate. On the other hand, anchor text of those 1000 poor quality links could help your site in SERPS. They probably maintain kind of IDF (Inversed Document Frequency index) for anchor text and you get decent rank with 1000 PR0 links, probably as with 400 PR1 links with the same anchor or 150 PR2 links, or 60 PR3 links... I mean I would construct anchor text analyzer such that PR have less impact i.e. (2.5x) than in PageRank algorithm (i.e. 10x). I'm not quite certain could usuall visitors on this forum understand what I'm talking about since it need some deeper knowledge, most SEO probably don't have. But, anyway if I construct SE I would drop most of crap directories nowadays. To calculate is directory crap I would use its BadRank/number_of_out_links measure. So, directory submission IMHO won't work much in future...