Including your site into top directories can create many inward links and generate more traffic. Some, like dmoz, are completely free while other, like yahoo can charge $300!
Free directories like DMOZ or Zeal can take months to include your site. It's better to volunteer to edit the category you wish, just be honest and say your joining to include your site but will review pending sites and clean up that portions of the directory. Be sure you thoroughly read the documentation. Most free directories do not accept commercial based sites.
DMOZ feeds straight into the google directory and many people have feeds from the directory to their site. So by joining in dmoz somewhere you get many, many inward links from miscellaneous pages. The more inward links with good keywords, the higher your pagerank.
Yahoo can be expensive, but joining in the directory may gain you a higher pagerank by the strength of the pagerank of the page they link you in. Without paying it can take 2 years for your page to be seen and even have a chance of just being ignored.
Get the google toolbar to see the page rank of the page. The better the rank of the pages that link you, the higher your standings in the search engine are. The real traffic you actually get is minimal, but to optimize it make sure you put your site into small directories or new ones when possible. If you're looking to have your site indexed in most all the major search engines, submit to the big ones like yahoo and dmoz.
Click the "webmasters" section on the left. Have fun!