Many people look at developing incoming links (where a site links to yours) to their site as a way to improve "link popularity" for better search engine ranking. But they overlook the traffic that such links can bring to a site on their own. Linking strategies serve a dual function for significant traffic in their own right as well as improving search engine rankings.
A lot of people assume that the more links to your site, the higher your ranking in search engines such as Google. But it's not that simple. Google factors in the "value" of the links to your site using a complex formula. Google uses at least two factors, and possibly more:
Google considers the quality of the site on which the link to your site originates by examining the links pointing at it.

If Google considers the originating site to be a "hub," then the sites that this hub-site links to can get a boost in popularity. Yahoo is a great example. A link from Yahoo has more value than a link from someone's site at Geocities.
Aside from a major directory like Yahoo, Google can also consider how many outbound links a hub has. The more outbound links, the lower the value each link provides to that site. Their worth is diluted. In theory you'd get the most value if the link to your site were the only link from a site that is considered a hub. There are several flaws to this logic. This a Google Catch-22, a hub is considered a valued site but because it has, by definition, lots of links the value of the site reduces.

The free SiteSell Value Exchange

1. registers your site as one that is willing to exchange links with other sites that have a similar theme/topic content and
2. searches for sites with similar topical content.

Some believe that linking to certain other sites improves your own site's popularity. But if you think it through, this makes no sense. People can link to whatever they want, which would defeat the purpose of what Google is trying to do.
It's not the overall number of links, but their relative value that counts. Going after links just for the purpose of improving search rankings is foolish. Seek links because of their potential value in directing qualified users to your site, not just for search engine traffic. You could generate 100 quality incoming links, and even if you didn't get much of a ranking boost, so what, because you now have a nice network of 100 links sending you traffic. And remember that no body of data currently exists to tell you exactly what effect a certain link from a certain site will have on your site from a search engine's perspective.

If you do decide you want to have links based on what Google sees as important, here's an approach that will save you some time. The Google Directory (http://directory.google.com) comes from a feed from the DMOZ.com Open Directory Project (www.dmoz.com), which is why it is important to get a directory listing there. What's nice about Google's version of the directory is that Google sorts sites at the category level on the basis of their page rank, a measure of the number and value of links pointing to a site. This gives you a nice roadmap for link seeking.
You can also get information on the importance of a site from the Google Toolbar (http://toolbar.google.com) or the Alexa Toolbar (www.alexa.com).

Finding links seems like a tedious process. It is an attractive proposition to make this easier or speed it up. There aren't any free services that will help that much, and most paid services rely on weak premises, as well. Stay away from any site that approaches link building in a bulk or automated fashion.
Google can easily tell when the same 50 sites are all linked to each other via a nearly identical links page. Certain companies are notorious for being link farms, filled with webpages that exist only for adding links to increase search engine ranking. The approach itself is flawed so it doesn't really help your business. But these companies stay in business because their clients are not savvy enough to know that they get no benefit at all from these 100 link-farm links.

Google is looking for good content because it adds editorial value to their own content. They're not impressed by people who try to fudge rankings artificially. That's why Google judges the value of the site that links out.
There are two tools available to facilitate the link acquisition process. Arelis Link Builder reciprocal links solution from Axandra/Voget Selbach Enterprises GmbH www.wilsonweb.com/afd/arelis.htm
Zeus Internet Robot automatic reciprocal link generator and link directory creator from Cyber-robotics. www.wilsonweb.com/afd/zeus.htm
Note that you may want to use these tools for target site identification, but once you have done that, do not send out bulk or identical e-mail link requests to each site identified. It is easy tell when those canned link requests are received.

Once you've identified complementary sites, take the time to look at each site individually to make sure you'd want a link on it. Then create a personalised link request letter that leaves no doubt in the reader's mind that the site was useful to you and that you desire to have a link from him. With linking, like any other introduction, first impressions matter.
One free tool you can use is Tilman Hausherr's Xenu's Link Sleuth (http://home.snafu.de/tilman/xenulink.html). It analyses all your links to make sure each is working. It also provides a text file of each of 10 URLs that have a link to you. It reports all the links on that page, and allows you to eyeball it.

If your goal is search engine ranking compared to your competitor, try some reverse link searches on your competitors. Google's syntax is the word "link" followed by a colon and the URL you are researching, such as:

link:http://www.ericward.com

Such a study helps you notice relationships between other websites and your competitors. You're looking for sites that are linking to your competitors but not to you. And not just from large hub sites, but also from industry specific link lists, web guides, etc. that serve your niche. One approach is to use a script to generate a competitive link analysis that examines linkages across any number of competing sites. Merge this into a spreadsheet/report of the potential target sites, organised into key categories based on "link urgency." You then can use the report as a roadmap for linking efforts.

A competitive link analysis can be time consuming but very productive. In one such study of 600 pages of links, a number of key sites may be linking to 3 or even 4 of a client's competitors, but not to the client's site. Getting links from these sites can make a big difference.

Imagine you had hundreds of links from great sites related to your business/niche, but none of these sites had ever been indexed by any of the search engines. Your "link popularity" score would be a big fat zero, since a search engine can't count what it doesn't know exists. But even so, these hundreds of links will send you regular targeted traffic on a daily basis 365 days a year.