I have tried many ways to impove ranking and search engine position. Using the free directories does not harm you and can help boost popularity and traffic a bit.
But the best way is to make people want to link to your
website hosting through creating a good quality
website hosting with lots of original content.
You can always "cheat" and pay to get listed in certain prominent places on high Page Ranking
website hostings which can help your traffic.
Hope that helps
.