Who to link to?
Think first about what your reader might want to know, might be delighted to discover via your post. Be generous, link to others who write in your niche, who you might even view as competitors.
Link to high traffic blogs. Go to Technorati and look for the most popular blogs, those with the highest rankings and search for blogs that have relevant material to your post, and link to them. Visit the sites those blogs link to and see if you should also link there. Read reader comments on high traffic blogs, visit the sites of commenters, searching for relevant and useful material there, and link to it.
Link to web sites that relate to your post and also add one or more sidebar link lists. They can be product oriented, service oriented, your own favorite blogs. Don’t go link overboard and look like a link farm (a site or blog that consists mostly of links with little or no useful posts or copy), but look for opportunities to link usefully and appropriately to your blog.
And, for goodness sake, make sure your links are live! Don’t make the novice mistake of thinking “If readers want to go there they can copy and paste the URL into their browser window.”
Test your links immediately after publishing your post, clicking on each one to see if it really goes where you want it to. And, periodically, test them again. You never know when links will go wonky on you.