Why use a site map?
A site map is useful for SEO to make it easier for indexing spiders to find all content of a site. Search engine spiders or bots have a hard time following links that use JavaScript, like mouseovers, so a site map with a collection of plain text links to all pages can make it easier for more pages of a site to be included in an search engine index.
Can using a site map improve my rankings?
Not any more than any other link within your site. The links on a site map page would ideally be plain text. The text you use to link to a page should be keyword rich and meaningful to the page you're linking to. This is true of any links on your site. Example: Site Map Text link to "Page A" which is about red widgets should use "Red Widgets" in the text that's being linked. Be careful though, it's more important to be accurate than including keywords.
My site has 1000 pages. Do I link to them all from one site map page?
Since Google is the top search engine, we use their guidelines for the recommended number of links on a page, which is 100 or less if you expect any ranking for your site map page. If that is the case and you have 1000 pages, it would be best to categorize your links across 10 or more pages. However, the purpose of a site map is typically not for a site map web page to rank highly, it's to make it easy for search engine spiders to find and follow the links contained within the site map page. Google mentions that a site map with more than 100 links should be broken up, so that would be the best method to follow.
Is there an ideal layout for a site map page?
A hierarchal format is most common and easy to read. Top level links are furthest left and sub links are indented. It would not hurt to have a very short text description after the top level category links.
Example:
(Used ------- as line space is not displaying properly)
Home
-------Products
------------- Category 1
------------------- Product 1
------------------- Product 2
--------------Category 2
------------------- Product 1
------------------- Product 2
About Us
------Management Team
------Location
Contact Us
Where and how should I have links to the site map?
Typically a site map link in the footer of all pages on your site will work. Avoid linking to your site map with a period or @ symbol. The site map you use should be very useful to site visitors so call it what it is and link to it that way as well: Site Map.
Site Map Examples: