DigitalPoint forum members discuss the pros and cons of targeting with YPN. The thread creator rationalizes that since YPN only has a total of 150 categories and subcategories and DMOZ has ~590,000, so there is no way to target perfectly with an almost 585,850 difference in categories. :)
After that thread, let me quote you phrases of responses to that.
On some sites it may serve targeted ads without using targeting, but I found one to two weeks later that had changed and could only be corrected by using targeting. I experienced a huge improvement by using targeting.
I started using the manual targeting option and the relevance is still very poor BUT I seem to be raking in the dough since then.
I don't bother with targetting, 95% of my pages serve relevant ads without it.
Today, I am seeing the YPN Ad Targeting feature working in REAL TIME!!! I change category, I get the new category ads. I change category again, I get the new category ads, RIGHT NOW! Sometimes the ads are way off, but I GET TO SEE THEM! Fantastic! Give it a shot. You can only gain.
Basic premise, like always, test it on your site and see what works best for you.
Forum discussion at DigitalPoint Forums.