i think tagging is one of the most useful things for libraries to come out of web 2.0. it allows users to find information using their own way of speaking and thinking, instead of limited vocabulary subject headings that they may never think of. I had always found library of congress subject headings really difficult to work with, and was so excited when the concept of tagging became widespread.
i had tried to get a grant for librarything for our library, but alas, i failed. i think it would be extremely useful for users to be able to tag items. i've used tagging on my delicious account for several years now.