I admit to being outspokenly on the fence about the utility of tags. Others are also asking the question. Recently, I was the first victim of a nascent Social Media Mob and found my entire work space "tagged" (see photo).
Adobe got consumers attempting this new paradigm with Photoshop Album (unfortunately v.1.0 was so rife with bugs, I gave up on it). And, there is clearly money chasing the phenomenon (see flickr, del.icio.us, et al.) but in 12 months will the echochamber (aka blogosphere) simply be reminiscing about that flurry of activity around tags that amounted to just a bit of serendipitous fun?
Metadata is critical to improving our ability to find things. I think tags are quite useful in context (search within my 1000 photos to find "mom") or perhaps within an ontology as a point of refinement. Once upon a time the Web was directory driven, but now 99% of people are being trained and honing their skills with a search box. It seems hard to believe that the population at large desperately needs a navigation scheme that they haven’t yet found.
But hey, a lot of smart people think they do. Well, at least now I can easily find my phone (see photo).
No Soap, Radio! 
Methinks that tagging is a very useful complement, as opposed to a replacement (or holistic panacea), of existing techniques. Creating ad hoc communities of interests by allowing broad-based tagging (one where everybody can tag your pictures/posts/…) allows you to cluster extremely quickly information in ways that would have been much more challenging in the past. This is especially true with pictures.
Hey, wait a minute, isn’t that why you guys bought Heypix ? To tag the Webshots archive ?