depends how you use them if its a way to get links to more popular sections of your site on the front page thus giving more juice to the most popular inner pages then I would say its a genius idea sometimes its just a waste though, depends how you use it!
Yes they are cool and just adds up to the web 2.0 world of navigation and also you can tag them as with the technorati.
I think most users don't get tag clouds, at least yet. Unless you have a techie audience, it could be more confusing than helpful.
I agree with Mike (the post above ) - tag clouds can be a good thing if they consist of "good" and proper tags - otherwise they're very confusing. Looking at tag clouds containing 200+ tags isn't very helpful...