Both are okay and I think both kind of directories can have a positive effect on your site. You can add your site to free directories to gain backlinks , while you can add your site to big paid directories to gain traffic and PR.
How much should I look at paying for a directory submission though. I believe Yahoo is about £200.00. Is it worth paying to get into those sorts of directories - do they deliver a great deal of traffic?
The issue with directories is that search engines rarely index them deeply. Paid or reciprocal inclusions sometimes guarantee that your link will appear in a page with PR, thus your url will be crawled by search engines too.