I have recently installed Autoblog and for a few days tags were showing up ok.
Today, no tags show or get added to the database whether processing is automatic or manual. As far as I know, I have made no changes that would have caused this.
The setup is configured to "Treat feed categories as" tags.
"Add any that do not exist" is unchecked.
I am using Autoblog 3.5.1, with Wordpress 3.2.1 on a single site install.