Tag Clouds (provided they are not cluttered and display just the relevant words) help visitors quickly visualize what your website is all about since the topics you frequently cover are mentioned in bold or relatively bigger fonts.
WordPress community already offers some excellent plugins for generating tag clouds (like the Ultimate Warrior) plus the upcoming release, WP 2.3, has inbuilt support for tagging.
However, if you are on Blogger or have a non-blog website, there's no reason that you should miss Tag Clouds.
Here's how to add a good looking tag cloud to your Blogger blog:
1. Type your Blogger feed address in RainMaker
Remember to replace xyz with your Blog ID. This URL will retrieve your latest 999 posts and supply that for analysis to RainMaker.
2. For the word link, type the following (where xxx is your blog name, e.g. labnol)
3. You can change the default font size, tag cloud dimension background image and colors to fit your site theme.
4. Now the tricky part. Once you have generated the tag cloud using RainMaker, right click over your tag cloud and click "View HTML source" - that the code you need to copy paste in your site.
Tip for Tag Clouds - If you really want visitors to spend more time on your site via Tag Clouds, always keep the number of words in Tag Cloud to an absolute minimum and that there is sufficient space around each word.