It helps a lot. I found my own blog's articles through keyword phrases i use for tagging many many times. Just by tagging alone you create a lot more chances for your site to appear on Google.
If you search Google a lot you might have noticed that on the SERP you can find relevance pages via tagging keywords as well, not just page titles.
The key is to use variety of keyword phrases, tweak it a little more, do not limit yourself only to ordinary keyword phrases when tagging. So there are more available matching terms on your blog for search engine to pick up.