Comment on WordPress SEO Tutorial by SEO Dave.
A lot of webmasters overload their sites with Tags/Categories which means they need more link juice to power their sites SEO. You want most of your SEO benefit to find it’s way to the pages that gain SERPs, those tend to be the home page and single posts (articles). Look at your logs and determine do your Tags/Categories pull in search engine traffic (some will, most won’t).
So you want most link benefit to get to the articles. You can’t eliminate some form of navigation on a site (Categories/Tags), but limiting it makes sense because every Category/Tag will take more link benefit than your most important articles.
On many of my sites with a PR4 home page I tend to find the Categories (which I try to keep to a minimum) are PR3 (sitewide links to them) and most articles are below PR2 (NOT sitewide links) with those linked from widgets like the Popular Posts Widget PR3 (sitewide links). If I added even more Categories the amount of link benefit that would get to articles would be even worse.
If you have a lot of Categories/Tags and they aren’t needed (you need one Category or Tag for each article, not 20 Tags per article) look at ways to reduce them and not link to them so much.