Recently we read some post on Webmaster World and endorsed by Seroundtable that Google is in process of purging free website directories.It is said that 50% of web directories are de indexed by Google. The post has also got another test by David Harry who prove 16% of free directories are not more in Google index.
We are into directory submission services since 1999 and have complete study on what search engines thinks about directory links from time to time.
It is common that poor and low quality directories had a six month life. There is New directories spam where people launch a bunch of web directories with same template, same directory script or software and database and offer it for free listing. These directories are made for Adsense / advertising or selling sitewide links. These directories are mostly de indexed by search engines because of duplicate and low quality contents or taken away by promoters themselves. It is common that out of new launched directories 20% vanished from the web within 6-9 months. The data mentioned by David Harry is correct to some extent.
Google Search Quality Strategist Kaspar Szymanski on Google webmaster blog has recommended directory links from tropical moderated and Niche directories
Directory entries are often mentioned as another way to promote young sites in the Google index. There are great, topical directories that add value to the Internet. But there are not many of them in proportion to those of lower quality. If you decide to submit your site to a directory, make sure it’s on topic, moderated, and well structured.
Reputed directory submission companies are already aware of these spam directories and do not offer them for submission. But Thousands of Freelancers directory submitter and small SEO submission agencies make use of such spam directories and which has no value.
In my opinion search engine are not against directory links except the spam directories.