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Before I take leave of this computer for the long weekend, it’s time to attend to one of the most contentious issues on the Web: the Gmail folders-versus-labels controversy.

Since Google launched its free Web-mail service on April Fool’s day of 2004, it has insisted that Gmail’s labeling system–in which you can tag messages with one or more labels like “work,” “repeatedly forwarded jokes,” “spam,” etc.–works better than traditional folders for organizing your messages.

That argument has some logic to it: With labels, you can file a message in more than one place, just as playlists work in a music program. But many Gmail users have spent too much time with folder-centric mail programs to give that up. Many others don’t bother with labels at all–at one point, only 29 percent of Gmail users had created even one, the Mountain View, Calif., company revealed in a blog post yesterday.

Back in February, Google relented on its label-centric view, adding a “Move To” command that both applies a label to a message and transfers it from Gmail’s seemingly endless inbox to an archive folder, named after that label.

Yesterday, Google conceded a little more. Gmail now displays your labels just below its real folders (Inbox, Sent, Drafts, Spam). You can label a message by dragging a label from that list onto the message. And you can label and move messages in one step by dragging them onto the label listed at the right–the same action you’d use to chuck that e-mail into a folder in a program like Microsoft’s Outlook or Apple’s Mail.

If you’d place yourself in the folder-traditionalist camp, are these latest Gmail tweaks good enough for you? If you’d rather categorize yourself as a labeler, has Google compromised the concept too much with this step? Sound off in the comments… but, please, not if that would get in the way of watching parades, setting off fireworks, catching a baseball game or other appropriate July 4th weekend activities.

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