I've heard that one advantage of migrating to the akonadi infrastructure is we can now organize contacts using tags instead of the traditional way of sorting into folders, but I don't think that's true? I have several folders setup under my resource, and they all function just like what they look like! Folders! If I have two categories, such as friends and classmates, I will end up with two identical contact entries under each folders. When updating one of the entries, only one gets updated. Am I missing something?

You're slightly mis-informed. You will be able to tag mail, but currently you can't.

Actually, I wasn't being specific in my post and got confused with the component I was referring to. I am having problem organizing my contacts in KAddressBook. Or is it the same case for it too? The tagging system is not implemented either?

It's not really ready. The best thing to do for now is to make sub-folders for addresses with a common interest, or use a field to place keywords, on which you can search. Full tagging should come with the next version. In the meantime, there are only work-arounds.

Thanks for answering the question I guess at the moment I just will have to deal with it...