I'm a technology consultant for DotDNA which is a full-service website design company (www.dotdna.com). I've been designing websites since 2001 and have a Diploma in Web Development.
Although you may not know what a web directory is, chances are you've used one in some form. Essentially all a web directory is, is a website that categorizes websites for easy viewing. Before search engines were the force they're now, the most common way surfers located websites was by using web directories such as the Yahoo Web Directory.
Even today, web directories haven't changed all that much. Most tend to just consist of categories, hyperlinks and site descriptions, however some advancements have came through in recent times. The ability to comment and rate sites are perhaps the biggest breakthrough and is primarily thanks to the birth of PHP.
Unfortunately web directories haven't faired all that well, and with about 95$ of people using search engines to find websites, many have wondered if bothering with web directories is worthwhile anymore.
You can expect a little traffic and branding exposure by submitting you website to web directories, but to be honest you shouldn't expect much. Where web directories have found a resurgence is due to their SEO (search engine optimization) benefits.
It may be ironic, but the very thing that killed the web directory, is in fact the thing that's basically keeping them alive - the search engine.
Search Engines actually like web directories and encourage users to submit their sites to them.
Search engines such as Google, Yahoo and MSN Live use certain algorithms to rank their websites in a specific order. By submitting your website to web directories, you will actually improve the positioning of your website position in the search engines results when people search for your keywords. For the desired effect to take place, you may need to submit to a good 50 directories but with each one taking a few minutes and usually being free to do so, many find that it's worth undertaking.
You will find literally find thousands of different web directories; most are general (meaning all types of sites can be submitted) while others are niche specific.
Whether you believe it's worth using web directories to market your website depends on how much your time is worth, but you will be hard pressed to find such an effective and cheap method of SEO.