Should I pay for web directory listings?

Your not going to get any SEO benefit from it but they can be an okay source of traffic. I would try Yahoo’s Paid Directory and if you can get an ROI or harness the traffic into links then your investment is worth the $200 price tag. However if you are unable to translate the traffic into ROI or even get traffic through the directory then there is no reason to continue paying for those listings.

Nope.

No, don’t pay for any kind of listing.

The only “directories” worth being listed in are the Google, Yahoo, and Bing search engines. Go to each of these yourself and submit your site directly for free. Being on a directory won’t make any difference to your search rankings. In fact it can hurt you, if the directory is known to be a spammy cesspool of unrelated paid links as your question suggests.

The only thing you might do is find out if there is a local association or group that caters to your industry (are you a landscaper, DJ, doctor, beekeeper, accountant…?) and add your site to any online business listings they may have. That’s sort of common sense. Other than that, stay away from directories.

Actually there are directories that are worth testing. Yahoo’s Directory ($200), Google’s Directory (Free), and even directories like BOTW ($50) are worth testing because they are legit and can be decent sources of traffic. No SEO value, but relevant traffic is the point, no?

When doing SEO it’s easy to lose sight of your end goal (ie traffic, ROI, etc.) because of your intense focus on the actual execution of the optimization. Just remember that because something doesn’t inherently have SEO value it doesn’t mean that it isn’t valuable to your site’s overall success. A good example of this is Wikipedia, links from them have no SEO value, yet a link or an article in Wikipedia can be a great source of traffic, traffic that can be utilized to fulfill your site’s goals.

As @SecondGlance said getting involved with spammy sites is a big no-no so do your research and if you question a sites integrity even a little… stay away!