From Google's Forum - Link options and Quick guideline...

A smattering of Reciprocal links You link to them, they link to you.
(The guidelines say avoid Excessive .... no hard figures ... but be "sensible", and you'll be fine) Remember - this is Your word, Your recommendation!
Do Not steer your customers/clients/readers to spammy, crappy sites!

A smattering of Directories
You Submit to listing sites, you get a link - - Remember - this is a source of potential Traffic, and possibly quality leads. You do Not want to seen/found in some backwards, limp/lame little dirtbox directory.
Things like HotFrog are fine. Things like Yell/Thomsons ... those are standard/reputable (apparently?). Things like Craigslist ... pretty standard. Do not go signing up to 40+ pants directories though .... most aren't worth toffee!
Look at the sites listed by the Directory - are those quality sites?
If you can - find some form of "industry" directory, or a Niche one etc.

Related sites
Remember - competition comes in lots of forms ... but there are some that are not really a threat.
Those that cover different areas.... that provide related services, but not the one you do etc. (this could work with the Reciprocal)

Articles
Most article sites suck.
There are a few that are worth while - so it may be worth your time to look around article sites that ONLY accepts exclusively written content from pre-approved authors that must apply for articles to be accepted. A good example is Ezine
Remember - do NOT use more than one embedded link in an article.
Remember - do NOT supply the same content as found on your site.
Remember - do NOT supply naff content - you want it to make people want to come to your site.
Remember - do NOT write a "me, me, me, me" article - it puts people off! (all about the site that says go go go to our site!)
Remember - it may not generate a "link" that benefits the rankings - but it may generate traffic and/or interest

Posts
If you can find a related blog....Comment on it!...Relevant, insightful .... and more than a single post.
Don't slap in your URL straight away.
Contribute a bit of time/effort etc.
Same goes for Communities/forums etc.
As per the Articles - these may be nofollowed etc. - but you are after traffic as well as rankings.
(You get traffic - you may get links from that traffic, if not the source of that traffic!)

Guest posts
If you provide a bit of quality commenting etc...you could try asking the operator if they would accept a post or two from yourself. This is similar to the article submissions.

Vary the link text
Do not use the same term repeatedly...the reason we have a primary keyword phrase, secondary, and long-tail assigned per site!
Do not stuff the link text with 34 variations of the same word over and over again in a comment, article, blog, or site content - Google will look at this as spamming!
Do not point them all to the same URL...the link you embed in the article, content, etc. needs to be linked back to the most relevant page on our site that matches the subject content,
Do not point them all to the homepage!!!

Link Schemes (DIRECT FROM GOOGLE!):
Your site's ranking in Google search results is partly based on analysis of those sites that link to you. The quantity, quality, and relevance of links count towards your rating. The sites that link to you can provide context about the subject matter of your site, and can indicate its quality and popularity. However, some webmasters engage in link exchange schemes and build partner pages exclusively for the sake of cross-linking, disregarding the quality of the links, the sources, and the long-term impact it will have on their sites. This is in violation of Google's Webmaster Guidelines and can negatively impact your site's ranking in search results. Examples of link schemes can include:

Links intended to manipulate PageRank
Links to web spammers or bad neighborhoods on the web
Excessive reciprocal links or excessive link exchanging ("Link to me and I'll link to you.")
Buying or selling links that pass PageRank

The best way to get other sites to create relevant links to yours is to create unique, relevant content that can quickly gain popularity in the Internet community. The more useful content you have, the greater the chances someone else will find that content valuable to their readers and link to it. Before making any single decision, you should ask yourself the question: Is this going to be beneficial for my page's visitors?

It is not only the number of links you have pointing to your site that matters, but also the quality and relevance of those links. Creating good content pays off: Links are usually editorial votes given by choice, and the buzzing blogger community can be an excellent place to generate interest.

Once you've made your changes and are confident that your site no longer violates our guidelines, submit your site for reconsideration (Google)
Submit your site to Yahoo