I run a directory site in a small niche and in the last 2 months, my traffic has more than doubled - most of it from Google organic search.
I am skeptical how long this will last as the last time I saw a significant rise in organic G traffic, I was then hit with Mayday.
However, I use the url of the submitted site as the anchor text, I edit descriptions and I remove deep links.
A website can only exist once in the directory.
All submissions are free.
It's been running for nearly 5 years.
We do send traffic to the sites that are listed.
There is no other site that makes it easy to find resources for this particular niche (which is why I set the directory up), so I think my directory is a good resource, and just because it's a directory, links from it should not be discounted.
I am sure there are many others directory sites out there that add value to their niche as well.
Therefore, I don't think Google should blindly ignore all directory links...unfortunately, Google doesn't take advice from me ;)