Does Google penalize sites that have backlinks from paid directories? Does it matter if they are strictly paid directories or a combination of paid, free & link exchange directory?
I think the main thing is that Google may not give the value to those links that you are hoping for - could be a waste of money.
I have heard of some penalties being given out too.
I think though, that as long as all of your links are not from paid directories etc...it shouldn't be too bad - just be careful about spending too much money on them because as I said you may not get the value out of it that you are expecting.
Why would you pay money for a Directory link anyway. There are way to many Free Directories out there and in most cases the directory page that will link to your site ether paid or unpaid has little or no PR.
Just because you have a directory with a PR of 6, Does not mean that you have a PR6 link back to your site. It generally means that your link is buried in web of thousands of links with very little value.
I tend to look at directories as a means of Basic link building, a means of getting out from a PR of 0. Once your site begins to rank with PR there are many opportunities that can open to you with a little effort.