blog is a big thing now, but it was long expected. it's become a sort of morph of a personal site, or extension to it if you will in some cases, along the lines of a personal diary.
there are blogs that attract a huge ammount of traffic and attention, especially political debate blogs and IT blogs but not restricted to those domains.

personally, I haven't read up much on it, but I would think that advertising on a blog would be more rewarding than advertising in a directory, simply because having a link on someone's "personal" page associates your site as a prefference or approval of the person holding the blog, thus users tha participatein the blog, and are expectably associated (trusting) more or less of it's author, will be inclined to follow his tastes and consult his "bookmarks", or simply put, links. imho.