Aaron Straup Cope gave a presentation on tagging and Flickr's use of tags over the years. Some key points:
1) Flickr adopted tagging from del.icio.us which showed that providing simple tools for user organization leads to participation.
2) Flickr has experimented with various tag visualizations and algorithms to surface interesting tags.
3) Machine tags were introduced to allow structured searching across tags.
4) Tags serve as a "foot-bridge between users and meaning" and enable serendipitous discovery of photos.