Here is a fascinating little video from Matt Cutts over at Google talking about how Tag Clouds can be dangerous to your blog. For those of you wondering just how efficient Google is at determining where on the page your keywords are, and this video is informative. In short, it suggests that tag clouds can hurt your blog. There are several reasons why they can cause problems and you should be aware of this:
This can have obviously implications for local SEO. My own research backs up what Matt is saying about Tag Clouds.