Internal Linking has moved on a lot, post Penguin. Sites that 
are in competitive niches need to be thinking very hard about this as Google gets more intelligent, with G beginning to pick up on footer links like never before. While this once worked like a charm, a footer link on a big site may now quickly the domain as potentially manipulative. Be careful!
- Point One - Be very careful about Site Wide Footers, either internally or externally. Run of Site, Blogroll or Site Wide links have the effect of giving you far too narrow anchor text diversity.
How can we be more intelligent about our internal linking?
- Google wants to reward a good user experience. First, prioritise your landing pages and place these at the top of an internal link pyramid diagram. Think about ways to link to this page from the other most relevant pages from the site: these pages will come lower down the pyramid etc. This is akin to showing Google, via your own linking, which pages they should rank. They will thank you for pointing arrows like this!
- Updating side bars seem to be working quite well still. Perhaps the Search Terms Tagging Plugin might make a comeback?
- Beware of Your Microsites – Google is getting awfully clever about this. Register these domains as private, use SEO hosting, vary your anchor text, do not use footer or run of site links.
- What would Google want us to do? Landing pages which have authoritative outbound links are still working…
Mr Cutts has some interesting points to add to this debate here
