The downside is you have to update your template, which will eliminate any customizing you've done. The flip side is the old version of your template is saved, and it appears to be fairly easy to revert to it should you become unhappy with any changes you make. I tried some "rearranging" at my photo blog (Lonely Pictures) and ended up with an annoying script load error, but I was able to return to the old template.
I may make changes to this one. I can't decide. I like the idea of labels. It would be nice for people who come here only for, say, my Sinatra stuff, to have one location for all the Sinatra-related posts. I'm not sure I want to update the template for this one, though. But I have switched my blogs over to beta, and I've noticed some minor posting tweaks (like improved Check spelling features) that are available even without updating the template. Annoyingly, my profile favorites lists are no longer links. That sucks. Hopefully Blogger will fix that soon.