In the recent long long post of Matt Cutts, he warned about how irrelevant & over promotional reciprocal link networks can hurt a site's indexing by Google.
Now there is no carpet ban on trading links, so long as the links are thematically related and target the same category of people. In short, these are links that solve the original purpose of driving traffic, not duping search engines. Normally sites trade links with other sites that freely offer links, such as poker, gambling, ringtones, SEO contests, mortgages, payday loan sites.
The links that are really valued are to relevant blogs, trusted directories, niche sites and local business listings programs. As Matt reviewed webmasters complaints who saw their sites dropping from the Google BigDaddy update, he came up with findings such as-
This is… a real estate site, this time about a Eastern European country. I see 387 pages indexed currently. Aha, checking out the bottom of the page,
I see this: Poor quality links (Matt shows image)
Linking to a free ringtones site, an SEO contest, and an Omega 3 fish oil site? I think I've found your problem. I'd think about the quality of your links if you'd prefer to have more pages crawled. As these indexing changes have rolled out, we've improving how we handle reciprocal link exchanges and link buying/selling.
- Moving right along, here's one from May 4th. It's another real estate site. The owner says that they used to have 10K pages indexed and now they have 80.
This time, I'm seeing links to mortgages sites, credit card sites, and exercise equipment. I think this is covered by the same guidance as above; if you were getting crawled more before and you're trading a bunch of reciprocal links, don't be surprised if the new crawler has different crawl priorities and doesn't crawl as much.