I know most people reading this already know the answer, but I just came across a quick example, so hopefully some people asking this question at a search engine will find this.

Recently I posted a post called "The Daniel Brandt Toolbar" and around a half dozen or so sites linked to me.

Almost every page in this site links to the "Buy Now" page so that when people search for SEO Book they see the home page first and then the "Buy Now" page listed second.

(As of writing this) when you search Google for "SEO Book" you now see my home page first and the "Daniel Brandt Toolbar" page second. It will change in a few days, but this does a good job to show how external links are often more powerful SEO tool than internal links are.

Give it about a few more days for the posts linking into the Daniel Brandt Toolbar to fall into the archives of other blogs and my "Buy Now" page will list again at #2.