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I agree, on-site optimization and good content are, and probably always will be the king.
I have got a site to number 1 for a decent keyword with hardly any backlinking at all and I just made sure the on-site stuff was perfect. Internal links, external, meta tags, keyword density blah blah.
Also the big G loves fresh, new, unique content. Give that to them alone and watch your site improve in the SERP's. Problem is this all takes time and most people are impatient (me included!) and I think that's why most people try and speed up the process by using 10000 backlink packs! Whether that's a good route to take on its own I'm not so sure...
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