Social bookmarking, tagging, labeling whatever you call it--it's easy and useful. I have a bunch of websites in my "favorites" but having to scroll through all of them and select them one by one is time consuming. Having a Delicious tag button makes it so easy. When I find a website I like and think I'll use again, I tag it. Then when I'm looking for a subject--let's say I'm interested in the economic situation in the US--I just click "economics" and all the sites pop up. I like this tool a lot.
I can certainly see its potential at the reference desk. Commonly asked questions can be found simply and easily by creating tags for the sites you use often.