In this video Matt Cutts discusses how important it is to understand the value of interlinking your websites properly if you have multiple websites on your server.
Here is the video that Google’s Matt Cutts talks about the cross linking question:
Often times people think that just because they have a few websites that placing links on all of them will help them with their link building efforts when most likely it will negatively impact their search engine results. Cross linking websites works when information is relative and beneficial to the user. If you cross link websites simply to manipulate search engine results to gain rankings the search engines they are going to pick up on that very quickly and penalize your website. Once your website is penalized it could takes months to get it back to where it once was. Matt Cutts states that if the websites are under the same corporate umbrella and they make sense to link to each other than there shouldn’t be a problem. You want to keep in mind that this like any other online marketing effort requires a tasteful approach and abusing it will results in serious ramifications from the search engines.
Always take a tasteful approach to your search engine optimization and internet marketing and keep in mind the user experience. If you over “SEO” you’re online efforts and your user experience starts to diminish you will not get any of the conversion you where hoping to get so it is very important to keep this in mind.