I know there have been userspace file system projects for Linux systems that have attempted the tagging system, but none have really become mainstream. Gnome seems to be going in the direction of time-pased file sorting which is another non-folder oriented way of thinking.
On the Apple side I think they really want their users to be searching in preference to tagging.
Microsoft had a go with Windows 7, but obviously they want users to be able to upgrade their old operating system making it impractical to make it a global default.
But the other thing to consider is 'Cloud' computing, a lot of online services (eg Google's) use tagging rather than a folder modal. This means if software moves more online/browser based we'll see tag-based systems emerge naturally.
Edit: Fixed some typos
The location where files are stored is where tags are a bit awkward. The folders are clear there. It's easy with folders to copy a picture from an SD card to my hard drive. From hd to a network mount.
The alternative would be to have magical tags, so everything you gave the 'hd' tag to, it would be stored on your hd.
In fact, the whole concept of adding a storage device to the system is strange with tags. Mount a 1Tb network share and automatic indexing starts? A standardized format for storing tag-information? What about computers that just change files directly without updating the tags? What about incompatible formats?
I wonder if applications could do a better job at tagging up files they create compared to the approach (in apple spotlight) to have search engine plugins that can find tags based on file content (mp3 id data, jpeg exif data,...).
If applications were more tag-aware, they could at least allow you to browse your files by tags instead of by folders.
Choose to save the file either on HD, external drive, or online, then choose how to find it, tags.
For what it's worth, my answer to your actual question is that for a large number of people and cases, the folder metaphor works well. You have individual items (files, pictures, songs, etc.) which belong in one bin. When you want that item, you open that bin. It's a real-life scenario that we all make use of every day (consider a refrigerator or a drawer with clothing, for example)
I'm not saying it's perfect, and certainly it would often be better or easier to be able to say "show me all the files that are (1) in Ruby and (2) have a certain method name" rather than "show me all the files in this bin." But folders are not too complex and cover a lot of essential cases.
I understand that it would be hard to completely remove folders, but it would be nice to have the option to use tags for those of us with over growing file collections.
It needs to have its corners rounded and rough edges smoothed out if you were looking for an easy solution, but it's there.
As to why there is no application to take advantage of it... maybe because it requires too much mind-bending. Most people stay as far away as possible from hard links. When you delete a file you want it deleted, not just "not here anymore".