Links have lesser value these days than before, but we all know that. Do not underestimate the power of links as having more links will never hurt your listings, but just not benefit your listings. If having a ton of links hurt your listings then we can all sabotage our competitors website by sending tons of links their way and having them de-listed?
What can hurt your listings is having unrelated links being sent out from your site. Hence sending links to a pharmacy site from a gambling site (this is frowned upon by google), but yahoo has not caught up yet.
Do not stop doing link trading unless you have another plan to get high listing in google. It is my personal belief that links are still a key feature for google, yahoo and msn and is good to remember that 
Recently on my own wheretobet.com site I allowed webmasters the ability to add their own listings to the site and a few webmasters took this up. Unlike having a directory called links I have included the links back to the webmasters site in the search results as seen on http://www.wheretobet.com/tags/online+sportsbooks/ (scroll to the bottom and you will see what I mean). Google is all about relevance and should links you are sending out and incoming links be relevant you should be ok.
My two cents,