People are all about links but then there's a concern about linking to bad neighborhoods. How do you identify bad neighborhoods? Should you nofollow them or stay away totally?
Use your gut. Trading links is natural and it's natural to have reciprocal links. At some level, natural reciprocal links happen, but if you do it way too often, it looks artificial. My advice is to go with your gut and if you're worried, you can use nofollow.