I found the burden of dealing with spam on my own directory, classifieds, and forum too great. These days we have to raise the time/$ cost of submissions to cut out the garbage. Rob: For your listings from real business owners that are useless from a marketing perspective, I suggest refusing to let them directly publish their business details and offering a paid listing service where you write the copy for them to help them and you. Local businesses should have a budget available for placing ads, printing flyers etc.
An online form to submit a local business listing doesn't make sense to me. I would visit the businesses with a presentation folder showing print outs of my site, and traffic stats etc. and sign them up with a paper contract form.