Onsite V's Offsite SEO

Hello all

Just wondering if anyone could share views on which yeilds the best results with search engune ranking - onsite seo (focussing on keywords, usability etc) or offsite seo (link building)

My site has been live now for around 6 months and we still rank quite poorly for the keywords we are optimising for - they are by admission very competitive:

Keyword 1 - 450k local searches per month
Keyword 2 - 100k local searches per month
Keyword 3 - 50.5k local searches per month
Keyword 4 - 30.5klocal searches per month
Keyword 5 - 12.2k local searches per month
Keyword 6 - 8k local searches per month

The seach volumes have been generated using the google keyword tool.

The site has been built well, all pages are unique and we have been working on link building for the last 6 months - mainly directories.

Google is seeing c200 links but we believe there are about 3k confirmed links and all have been done through manual submission.

Looking at some of my key competitors they have c11k links showing but the other significan difference is the site page numbers - mine is showing some 20 pages whilst theres are showing between 600 & 1000 pages.....................could this be having a significant impact on my progress?

Any thoughts/experience would be gladly received and i feel like i am wading through treacle!

Thanks