The debate rages regarding paying for inbound links in order to improve your Page Rank, and Google’s efforts to detect (and penalise) sites playing the paid-for-links game.
As a quick reminder, Google is absolutely clear that buying links to improve your Page Rank violates their quality guidelines; however, buying links as part of online advertising is confirmed as a kosher activity.
To this end, Google is actively soliciting us to report those nasty, nasty link selling cheaters in order to help them improve the Google algorithm or method to detect paid-for links.
If you’re worried about paid links (and you probably should be) then read Matt Cutt’s long but useful overview. In it he clarifies Google’s view of paid-for directories (if the quality is good, then they’re OK) and confirms that sites selling links are likely to lose the ability to pass their link value onto other pages (which means it just not worth buying the link, after all….)