I think a link wheel is a wheel of links/pages where you also link to your social networking accounts and blog together like you add a link to your twitter account on your facebook page where you also have links to your websites.
I'm not sure it will work for getting more search traffic, but you might get a few more followers and traffic on your social network accounts, and other sites you link to in your link wheel.
I read somewhere it is better to get links from authority websites like CNN, Yahoo News, Tech Crunch. which are very hard to get since authority websites rarely link to your site unless they found your site useful to them.
