As we all know, Google is now officially announce that buying/selling text link will risk your site. The penalties for link buying/selling are clear. See Google post at Google Webmaster Central .

"This confusion lies in the common belief that there are
two ways for optimizing the link-based popularity of your website:
Either the meritocratic and long-term option of developing natural
links or the risky and short-term option of non-earned backlinks
via link spamming tactics such as buying links.We’ve always taken a
clear stance with respect to manipulating the PageRank algorithm in our
Quality Guidelines.

Despite these policies, the strategy of participating in link schemes
might have previously paid off. But more recently, Google has
tremendously refined its link-weighting algorithms. We have more people
working on Google’s link-weighting for quality control and to correct
issues we find. So nowadays, undermining the PageRank algorithm is
likely to result in the loss of the ability of link-selling sites to pass on reputation via links to other sites".

So if you sell text links and Google figures this out they might take away your ability to pass reputation to other sites. Also buying text link is consider as non-earned links and will discount these links if Google spot them.

What will happen to small paid directory ? The directory can still operate and accept payment for review as long as the site submitted used the nofollow attribute. Who like their site to have a nofollow attribute ? No one I guess if they targeting SE not the traffic.