Indeed it is more powerful, as Gmail has shown us when it entered that tags are a superset of folders. Maybe I have a contact that should be both in a 'family'

Indeed it is more powerful, as Gmail has shown us when it entered that tags are a superset of folders. Maybe I have a contact that should be both in a 'family' group and in a 'work' group. That said using tags is also more difficult than folders, because they're a "relatively" new concept. We tech people are completely used to it, but I'm pretty sure if I ask people around me they would not be comfortable using it. The visual cues need to be different from the standard hierarchy organization.