Google has urged in writing that web sites submit to directories, especially DMOZ & Yahoo, for years. At least until a week or 2 ago.
Their webmaster guide, followed closely by the SEO community, has always been important, especially since the search engine race is owned by Google.
The deletion of that suggestion immediately caused many to say that it meant that directories were no longer important. That Google might be moving back to content as a bigger deciding factor in ranking. In other words, something closer to what Yahoo and MSN have been.
It might be, but probably not to the degree that those SEOs believe. It’s been well known for some time that a DMOZ link is not nearly as valuable for ranking as it once was. That development, which is at least 2 or 3 years old, was met with a sigh of relief from people like this writer. DMOZ was well known for its questionable practices about who got a link and who didn’t.
As for directory links at large, Google is saying that they’re just choosing not to highlight it in the webmaster guidelines. That sounds like Orwell speak, but it might be true. I believe that directories are still a good start for a link campaign, even if their value has dropped a little. Whether that drop has actually taken place isn’t at all clear, though.
What this means for good, effective SEO is that you should continue to do what you’ve always done – write & created targeted, solid content and continue your link campaigns, including directories. No reason to panic.