Once upon a time, directories carried some weight on the internet. Think DMOZ, Yahoo Directory, Business.com, and others. They helped categorize and drive traffic on the internet. Now there’s Google (there’s others, but they hold a much smaller share) and people just search for what they want. How many ‘regular’ internet users, not webmasters, use directories? Not so much.
But I don’t think directories are dead. For webmasters, directories can still help your sites gain page rank, build links to your site (important for all the search engines), and yes, even still drive some traffic. My Directory Network gets thousands of unique visitors every month (and that’s just the main site, there’s 30 other directories in that network 
). The vast majority of this traffic is webmasters, but regular users stop by, too. The internet is so huge, and the audience so vast, that there’s room for a lot to happen on the web.
So if you’re a webmaster, there’s definitely still value in submitting to directories. Just make sure you do some checking into the directory before you submit, especially before you pay. There’s tons of directories with no page rank or traffic, or the page rank is fake or built on an expired domain (so it won’t last but a couple months unless the webmaster promotes it and builds new links to the domain).
So yeah, I’m a little biased, but I’ve submitted my other sites to other directories, so I’m also walking the walk.
You can check out my Directory Network, which consists of 31 directories, PR4 for the main and Pr3 for all the ’satellite’ directories. Sponsored submissions get 5 deeplinks and randomly listed in the sponsored sidebar on all sites. A pretty good deal. Check it out.