Matt Cutts has updated his blog post How to report paid links this weekend. The update has a lot more detail on Google's view of paid links.
Sites with paid links may lose their ability to pass link value to other pages
Not all paid links are bad, only those that "flow PageRank and attempt to game Google’s rankings"
Examples given of bad paid links include those that have links to pages that are not related and pages hiding the fact that they are paid links
Google still picks up on the two examples above, according to Matt
Google wants spam reports on paid links to better test, confirm and improve their algorithms
Directory links from directories that reject submissions, charge a fee and have quality listings in the directory should be fine
Don't try to hide the links or make them "undetectable," as Google will find them
For more detail check Matt Cutts Blog..!!
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