[B]So how much of value does the Tag Cloud add to SEO?[/B]
In the SEO perspective, each link in your website pages has a value. This value is also passed onto your internal pages of your website too. Hence an even distribution of this link value is important for every page. Equally important is the linking of internal pages from the home page.
In my opinion, a tag cloud dilutes this distribution by showing a huge number of tag links, that do not point to genuine pages like product features or forums etc... of your website. They generate additional pages for your website, but with very little value or quality. What you end up with, is a bunch of pages that are possibly SEF enabled.
Search engines spend time crawling websites and hence it is important that you provide quality content and links to it. This will ensure that, it spiders through all the good content and links of your website in the shortest possible time that it crawls.
Nevertheless, tags can add value, if,
1. They are few in number
2. They are highly relevant to the displayed content
3. They generate lesser number of additional pages for your website.
So choose your tag cloud with care. They can have a huge impact on your website SEO.