This myth has been around for as long as I have been involved with SEO, so about 8 years.  I recently replied to a thread on DigitalPoint forums concerning this myth.  The original poster mentioned that they recently bought a domain name and a hosting package and the hosting company was offering them a fantastic deal of 50% off search engine submission.  The offer read something like this:

For a limited time receive 50% off the regular price of search engine submission for SEO, we submit to 13 of the top search engines to get  your website indexed quickly.  Regular price is $99.99 – sale price is only $49.99.

My response was that not only is search engine submission unnecessary but I think it is a ‘red flag’ for a company that does not have a clue what SEO actually is.  It seems Rand over at SEOmoz agree because he is redoing Beginner’s Guide to Search Engine Optimization over there and he states:

Since 2001-2, search engine submission has not only not been required, but is actually virtually useless. The engines have all publicly noted that they rarely use the “submission” URL lists, and that the best practice is to earn links from other sites, as this will expose the engines to your content naturally.

So be careful and don’t waste you money on useless services.