Keyword rich domains are important for both directories and search engines, but for different reasons. Since directories do not actually crawl your site they can only use information associated with your listing to determine your rank in any search results. This information includes your URL, Listing Title, Listing Description, and any other fields, hidden or public, associated with your listing. Most directories have rules about excess keywords in a listing's title or description so the only place you can get ahead of your competitors is in your URL. If this is a listing for a subpage you can also put the keywords in your file and directory names, but if this is for your site's home page the only place to put keywords in is your domain. Also you need punctuation separating the keywords otherwise the directory software might not be able to parse them out, thus the use of hyphens.
Search engines also can be influenced by keyword rich domains, but not how you think. Search engines may or may not count keywords in a domain as a direct benefit, but it doesn't really matter if they do or not as it would just be one of many on page places where keywords are counted. The reason keyword rich domains help with search engines has to do with link popularity. Most people know that incoming links help their search engine ranking, but they may not know that the context of your incoming links is extremely important, especially the actually text that makes up the link. So what does that have to do with keyword rich domains? Well, everything, you see any time someone links to you using your domain as the link text such as this:
Your domain is the link text and if you have keywords in your domain, hyphenated keywords, then you will receive a greater benefit than if you did not. Links such as this are more common than you may think, especially when you consider most outbound links from forums are of this nature.
Some of you may be concerned about using the hyphen, some people plain don't like it, others worry about having to mention the hyphen all the time when telling someone their URL. Realistically though, unless you're talking to a few thousand people a day, word of mouth will not bring in as much traffic as search engines. However, due to the low price of domain names, you could always buy the hyphenated and non-hyphenated version. Use the hyphenated version for search engines and intra-site navigation, and use the other one when mentioning your site to people.
The use of hyphens and long domain names is one of the most hotly debated topics between search engine experts and webmasters in general. So chances are if someone disagrees with anything I say on this site, they'll likely disagree with my domain name recommendations. Even though having such a long domain helps, there are other alternatives, and honestly you may not even need one. In the end you will need to decide which you think would be better for you.
You also may not even need such a long domain and or keyword rich site title. It all depends on your site's depth and scope. The larger your scope and deeper your depth the less important it is to get a keyword rich domain. For instance if your site is about "Art" having a keyword rich domain is less important. People don't often search for "Art" they search for "Leonardo Da Vinci" or "The Impressionist Movement." So it's less important for you to have a high-ranking homepage, than it is for you to have high-ranking sub-pages. The more pages your site has and the wider it's scope the more likely it is for people to find you via a sub-page, rather than your home page, and so the less important it is for you to get your home page ranked highly.
Of course being ranked highly for a general term like "art," "web development," or "sports" would bring in large amounts of traffic. However it would also be very difficult to achieve a high ranking on such highly competitive words. On this site you'll notice we do not use hyphens for this very reason. You might also name your site after a word that isn't searched for very often, such as "Website Publisher." On this site we do not use hyphens for a reason, there would be very little benefit as "Website Publisher" is not a competitive nor popular search term. With this site we're taking the approach of getting our article pages ranked highly, which is why we use hyphens in the URLs for our articles.