What is the effect of bookmarking our website in social bookmarking websites in connection with SEO? It is true that bookmarking brings huge traffic in a few days - on a short term basis. Does the links help in better ranking with SE ?

This is all hype. While you can get links from these sites their value is no better then submitting to directories really. Unless you can get your submissions dugg or similar it isn't a good SEO strategy to focus on (and most submissions do not get dugg). Submit your stuff and forget about it. Definitely don't fixate on it.

Social bookmarking is useful if you have a good title tag asociated with good content on yor site.If the title is good but the content on the site is not useful you will be burried.
Also you need to have many user that bookmarks your post in short time from the post.
Some social bookmarking use nofolow tag.
Social bookmarking traffic is very poor converting.
Social bookmarking depends on the networks of friend , I know that at digg 15% of users post 80% of total posts.

If think if you want to have sucess with social bookmarking is to have a network of webmaster that bookmarks post from the network using a probability algoritm because if the same number of webmaster bookmarks the same post social bookmarking sites will see that like spam , but using a algoritm that look like someone bookmarks some sites randomly(not all) and in random days it is a chance to get something.

I had submitted my links and details to over 100 social bookmarking websites hiring some one to do the job. Whatever I spent to hire him was worth that money - as my traffic increased much within a few days. It was not on a long term basis, but still for those days of increased traffic, I could earn a handsome figure.

I wanted to know about how will those links in the social bookmarking websites help in SEO. Though not all the websites, but atleast the most popular ones will be doing some good as I hope!!

Most of social bookmarking web sites used "nofollow" tag and for that reason, they will never help your to rank well.

I saw that in google webmaster tools are showed nofolow links.
So remain the question if are good or no.

Google has publicly confirmed that links with nofollow have no value whatsoever.

Linkd for social bookmarking sites will do help bring in link traffic from readers but technically it will not help SE ranking so there's NO SEO benefit.

Still, having a text link from a high PR, old webpage do help SE ranking

As long as those links are
:

1) On topic
2) Not using nofollow

Then that is true.

If you social bookmark properly and supply good quality content, you can expect to gain dozens of quality back links as other bookmarkers, bookmark your content. This technique is a popular tool for successful search engine optimization and the best feature of social bookmarking is that it is free to use.