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Web Promotion
First of all, reciprocal links aren't dead, not by a long shot. It would be foolish of any search engine to ignore links from one authority site to another just because that other site points back to it. That, in fact, reinforces the value of both sites!
What really happened is that Google got smarter about reciprocal links. They are harder on link farms now, and bogus "directories" of links. So the people who are crying foul probably had most or all of their links coming from these kinds of shady sources.
Business - Directory of business/finance/loan/mortgage related partner sites
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Computers - Directory of computer hardware/software/peripheral related partner sites
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Internet - Directory of webhosting/webdesign/internet marketing related partner sites
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Software - Directory of software related partner sites
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Web Design - Directory of web design/development related partner sites
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Web Hosting - Directory of web hosting related partner sites
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Web Promotion - Directory of search engine optimization/internet marketing related partner sites
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Web Resources - Directory of other web related partner sites
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Recreation - Directory of travel/hotel/cruise related partner sites
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Casino - Directory of online gambling/poker/blackjack/roulette related partner sites
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Health - Directory of online pharmacy/hospital/health related partner sites
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Shopping - Directory of online shopping/gift related partner sites
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Miscellaneous - Directory of all other partner sites
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Besides, reciprocal links should ALWAYS be looked on as a short-term boost to get a site going. You want to get those reciprocal links so that you can get ranked for some less competitive keywords. Once you're getting some traffic, if you're offering high quality content to your visitors, you'll get more links into your site naturally.
This happens because if a lot of people value your site, you are bound to get talked about in forums and message boards that are related to your site topic. And other webmasters who visit your site and like it will add links from their sites to yours. Your link popularity will grow naturally–as long as your site content is high quality.
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