Blogger has problems with publishing when you have a lot of labels on your blog. In fact if you have more than 30 or so labels, get ready to pull your hair out or have over an hour to publish your posts or even have inconsistent publishing.
I have found from personal experience that it is better to use your labels for top keywords and as blog navigation. Just don’t get in the habit of creating a new label for every post. Routinely we keep our bloggers set with about 10 to 20 keywords and ask them to post to these labels only for their blog posts.
One this keeps blogger from getting label bloated and keeps publishing snappy. The other thing is that by assigning labels for your bloggers you control the focus of the posts for search engine optimization.
As labels are also used for additional content navigation, we also recommend that on every blog a search engine function to be installed so that visitors can review content in an easier fashion. It seems that you could do this with Blogger labels, but once you have a bloated blog and sit for hours for publishing you will understand the wisdom of controlling the number of labels on your blog.