Official Google Blog: The evolution of Gmail labels

An interesting case study in user conceptual models – and how difficult they can be to change

I love labels in Gmail. Most email programs use folders, which only let me put mail in one place at a time. With labels, I can organize mail in multiple ways. Combined with filters to automatically label incoming messages, Gmail offers powerful ways to organize email.
When I joined the Gmail team, I was surprised to learn that only 29% of Gmail users had created any labels. At first, I thought perhaps conversation threading and search made the need to organize our mail less important. But when we talked to people who use Gmail, we got a different story. People often asked us to add folders to Gmail, assuming no system of organization existed. As one person said in a usability study, "What are labels... and where are my folders?"

See the full post for more details on how Google’s label model is looking a lot like a folder model these days

Official Google Blog: The evolution of Gmail labels