I'm very frustrated to report that Google's Picasa version 3 has been nothing but trouble. I am now on Picasa 3.1, this being at least the third version of 3.x. I first noticed with the first version 3 update that a few captions were wrong. I corrected a few, but as I looked closer, many of them were wrong -- the captions and pcitures were no longer correctly associated.
After the next update, I noticed that Picasa was slower, often hanging for a while. This also included causing screen refresh problems with my other applications that were running at the same time.
I just finished allowing another version 3 update, and I notice it seems to be re-building my library -- I now seem to recall it did this with the first version 3 update. I also noticed with pictures that I've added after the prior update also have incorrect captions on some of them -- I hadn't put captions on any of them, yet.
Update 17-Jan-09: I've re-opened Picasa, and now the thumbnails are mixed up too. Wrong thumbnails compared to the photos, and the thumbnail ratio/proportions are wrong too.
Needless to say after recommending Picasa back in March of 2007, I can no longer recommend it. Further, if you have it, but have not upgrade to version 3 -- don't. I guess it's time to find a new photo management solution. Of course this means I guess it's time to give Flickr a shot, too.