Yes they do and the market is...
RIPE FOR THE PICKING!
One of the biggest problems I see with the many directories that have sprouted up over the years is that they all want to try and compete with dMoz. They are targeting a global market when they have no business in that market to begin with.
For example, I see a popular directory out there that has tens of thousands of stub pages indexed by the search engines, most are local pages. There used to be hundreds of thousands until the SEs started purging some of the junk. But, it appears that some of it is coming back into the index.
Personally, I feel the best directory is a niche one. I'll go one step further and say that local directories are the next wave. Actually, they have been. The local market appears to be untapped by many and if you follow Google, they are slowly infiltrating that market. So, if you are going to build a local directory, get in the game now before its too late.
And, for those directory owners who continue to fill the SEs indices with nothing but stubs, may the fleas of 1,000 camels infest your armpits. ;)
The Don'ts of Directory Development