SEO-wise, you're likely better off in doing a single site with multiple Category/Geography combination pages, since all your link-building might benefit the entire directory site, as opposed to being split across many sites.

If you were considering setting up many precise sites and inter-linking them, without sufficient external link building this could look like a linking scheme and could result in penalization from Google.

I have had a number of clients who wanted to do something similar to what you're describing, which is a sort of "microsite" strategy. This tactic tended to work better 4+ years ago than now. Deploying dozens/hundreds/thousands of sites with keyword-rich domain names is typically an attempt to take a shortcut as opposed to doing quality site development.

If you're intending to set up geo+category specific directories which are of VERY high quality, this would be alright. But, the bar for that is pretty high.

From a user-experience perspective, this might or might not be a good approach, depending upon what you do. If you deploy many low-quality sites, users are unlikely to bookmark you and return to use you again. If you don't have high-quality content and utilities, spreading data across many sites could hurt you -- users might return to a low-quality site that has lots of data, where they're far less likely to return to a low-quality site that is thin on data.

From multiple statements Google has made, it's clear that consumers like descriptive URLs in search results. Because of this, keyword-rich domains sometimes perform better than other non-descriptive domains, if all other factors are equal. From this perspective, the many URLs could be good if you deliver what the domain name "advertises".

My strong recommendation is to avoid this practice, because most people are not prepared to focus sufficient development and promotional efforts on many multiple sites.

thanks Silvery!

Echoing and expanding on Silvery's post: I would suggest picking one or two categories that you expect to generate income and allow you to become an authority in those fields.

Become the expert site that has the high quality fresh content. Visitors are much more likely to return and recommend your resource to their friends. A narrow focus also lets you test the waters and learn from your initial efforts. When the time comes to branch out you'll probably be able to grow much faster.