One of the frustrations Kindle owners have experienced is that there is no easy way to organize their books— no folders or tagging function— although the Amazon Kindle page on Facebook recently said Amazon will provide a way to do that by the middle of next year. Yay! One advantage to a wireless eReader is you can get software upgrades automatically.
I'm rather hoping Amazon provides a tagging function, though, and not true folders. The thing about a folder is, you have to pick just one. It's almost like putting a physical book (a.k.a. a p-book) on a shelf. You have to pick one shelf. The thing is, with books, labels can be too specific, and too limiting. What's the point of having an ebook instead of a p-book if you're stuck with the same limitations?
For example, I recently started reading Ken Scholes' Lamentation (an excellent story, BTW). It reads a lot like a fantasy, but it clearly has a science fiction basis. If I had to chose whether to put this book a folder labeled Science Fiction or one labeled Fantasy, I would be torn. But if I could apply both labels, I probably would.
GMail has a good use of labels. All your messages are really stored in the same place; they just have labels so you can view them as a group when needed. Even your in-box is really just a label. When you archive a message, GMail just takes the in-box label off of it. This allows me to label email about my daughter's tuition payments with a label for her name, another for the school name, and another for bill paying.
With a book, the title and the author are one kind of label, the only ones a Kindle book comes with, for now. In addition to genres and subgenres, other useful labels might be my own rating of the book (e.g., how many stars) and whether I have read it or not. There are times I'd really like to be able to hide the books I have read without having to delete them.
What about you? If you had a virtual library, how would you want to label your books?