I am looking for software that allows me to tag my digital pictures. 
I would like fields for names of people in the pictures, location,
date, event, etc...  Essentially, I would like to be able to search
for all the pictures of my wife, for example, or all the pictures of
our vacations through the years.  I have a feeling that there may be
plenty of options on this, so I have a few extras (of course)...

I do not want to use an online service for this, such as Flickr.  I
simply want a desktop based application.  The simpler the better, as
well.

I saw an article one time about a product that does this that had a
very cool feature:  after doing enough pictures, it could
automatically identify the people in the pictures, which would be a
HUGE time saver!  Obviously, this would be nice, but is not
necessarily a requirement.

Of course, the cheaper or free-er the better, but I am willing to
entertain options of almost any cost that meet the above requirements.

Thanks!

I'm currently cataloging all my photographs in the same way you are
talking about. The best program I found (for what I wanted) was Adobe
Photoshop Elements 4.0. It does exactly what you're looking for,
allowing you to tag photos with people, places, events, and everything
you can think of to tag. It also organizes the photos automatically by
time and date.

Of course it's not free, and if you're looking for a free program,
it's probably not cheap either. The new 5.0 version is around $90, but
it's well worth the price. I highly recommend it.

 - artqs

And one thing I meant to mention, I really like the way the tagging
works. In searching for programs (software), I found many that allow
you to tag, but not cross reference photos. With this program, you can
not only find photos of your wife or photos of your vacations, you can
have it find photos of your wife while on vacation. - artqs

Picasa is the best software for organize photos.

http://picasa.google.com/

I have catalogued digital family portrait, family holiday and ancestry
photos etc. for several years and the method that has worked for me
the best is to always update the filenames as soon as the photos are
copied to my PC. Any people in the photo need their name and not "Mum"
etc. This gives them longevity and consistency.

In Windows XP, if you highlight a selection of photos and then edit
the name of the first photo and then finish it with "(1)", then all
the remaining highlighted photos will have the same filename but
numbered. For example "2005 12 25 Rick at Christmas (1).jpg".

As shown above, I insist on all photos having the date in numeric
format at the beginning of the filename (a mixture of "yyyy approx",
"yyyy", "yyyy mm" and "yyyy mm dd" - as accurate as you can be). I
also segregate the files into folders with names as groups of years,
for example "1980s" or "1980" or "1980 Part 1" and "1980 Part 2".

I also often click the folder menu item 'View>Arrange Icons By Name'
to keep them in order.

Immediately before burning any photos to backup DVDs, I resort them this way again.

Then I use the Windows built in search engine to find items. I also
use the Windows Picture And Fax Viewer to show off the photos as this
has the filename at the top.

All this can be done without ever editing the photos or updating any
tags in them from the camera - if you so desire.

Also, usefully, if you order photo prints online, the filename is
often printed on the back. Even if it is truncated, the date should be
shown.

I realise that my idea above does not involve tags.

Had I read your question more carefully, I realise I do not actually
have a Tagging answer.   :o)

I would suggest you to use the software 'ACDsee'. This has a powerful
way of saving information about pictures.