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Picasa 3.5 is here. The most valid update is better tag support. Picasa will now search all your photos and try to recognice faces and add tags to them. There are also synchronized with Picasa Web Album.
Big improvments, but still a major function is not there: Access-controll on individual photos. Look at flickr.
Waiting for Picasa 4.0 .... maybe Google make it rigth there.