I think a distinction needs to be made between the director and the manager. The director is in charge of things like the budget and justifying that budget to the CEO. The director receives that justification from the manager. The manager is in charge of making sure projects are planned, requirements are gathered, and projects proceed apace. The manager receives the funding for that from the director. Beneath the manager should be the project manager (time coordination), development leads, etc ... and they report to the manager.

The director doesn't need any technical knowledge. It's good if the manager has knowledge of at least the development process.

If you're lucky, you can get someone who can be both director and manager. My experience has usually been that some poor schlob ends up having to be both, but is really only qualified for one. My best experiences, though, have been where the two hats were on different heads.