Free submission is not dead, there are plenty of directories that accept it. As far as free submission to search engines, it is a non-issue as pretty much all major spiders are crawling the web heavily and one link will bring in spider the google spider, followed by almost all the spiders you should worry about.
Yahoo is not free. The only part that is free is to get into their search engine. You have to pay to be in the directory. Looksmart works on a PFI/PPC model, I have found them to be ok (I got a decent ROI), but that money would have been best spent elsewhere (in PPCs).
I have payed for inclusion to yahoo, and found it to be worth it, with a fairly decent budget.
As to whether PFI is worth it, that is general, as it will depend on which site your talking about (to be included in), what industry, what your budget is, etc...
A simple answer to your question is PFI can be worth it.
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