It does allow photo tagging. In fact, I think Google+ is smarter than Facebook when it comes to identifying a person's face for tagging. It even provides good guesses of who the person in the photo might be. Try it!
In my opinion, we won't be seeing ads on Google+ any time soon. Google+ is going to provide the social layer on top of all the information on the web that Google has indexed. By adding a social layer, its search results (Google's primary source of revenue) are going to become much more relevant and by knowing the social graph of its users, they can even collect information such as how many degrees away are you from a specific topic or interest. All these will turn into more targeted search ads for users.
Think of Google+ as an intent generating platform while Google Search is the one doing intent harvesting (and thereby making all the money for Google). Also, why would Google introduce advertising to its social network when many of its users are coming to Google+ simply because they are tired of all the ads that they are seeing on Facebook?
I might be wrong but I just think that Google far from desperately needing a direct revenue stream from its social network as compared to Facebook. What do you think?