I am a great fan of tag clouds, especially if some thought is given to the tags. I avoid using category lists if I can, especially if these are being used to generate the menu.
WordPress 3 has a simple tag cloud widget that can be activated in TwentyTen, which is also easy to activate.
PLEASE BACKUP YOUR DATABASE BEFORE MAKING THESE CHANGES!
1. Log into the Dashboard using an Administrator account.
2. Click on “Widgets” in the “Appearance” area of the left-hand sidebar.
3. Find the “Tag Cloud” widget near the bottom of the list.
4. Drag the widget into the “Primary Widget Area”.
5. The widget does not have many options.
6. If you like you can display a category cloud instead.
7. Since I already have categories on the menu, I’ll delete the widget.
8. Now the tags appear on the sidebar where previously the category list was.
This may not be the most sophisticated tag cloud, and there are plug-ins that offer a lot more options. But if the basic version suits your needs, it’s one less plug-in to install.