You've heard the threats.
Matt Cutts, head of Google's spam team, has told us to stop guest-posting for SEO, and Google's Penguin update periodically slams sites for malicious link-building. For example, My Blog Guest was penalized for promoting SEO guest blogging.
The threat is even right there in Google's terms of service and has been for a very long time: "Any links intended to manipulate PageRank or a site's ranking in Google search results may be considered part of a link scheme and a violation of Google's Webmaster Guidelines."
So if you build links with the goal of manipulating rankings in Google, Google is free to consider what you are doing a "link scheme."
Does that mean you should just stop building links? No, it doesn't. (And if you do, don't expect your SEO efforts to work. At all.)
The Pendulum Swings
According to a recent study by Ascend2, only 25% of SEO professionals consider link-building to be one of the "most effective SEO tactics." That is a sad example of the ignorance on display by numerous self-proclaimed SEO "experts."
For a long time, link-building was billed as the most important ranking factor by the industry. This, too, was always a misconception. Though links have always been a crucial part of Google's ranking algorithm, there's really no such thing as a "most important ranking factor."