You can add infinite number of tags and categories to your blog but the big question is do tags or categories really help in improving SEO?

Matt Cutts from Google says that it is not really required to add too many tags to a blog post because search engines can easily figure out the page context from the article text itself without looking at the tags. You can have tags but don’t worry too much about them.

On categories, Matt Cutt says that adding a category can be useful because then your readers can follow a particular topic on your blog by just following that category.

Here on Digital Inspiration, I associate everyone post with one category and 2-4 tags.