I spent the past weekend researching the same topic and I'm currently in the middle of updating my tags, titles and pictures. The thing that I found the most helpful was this quiz because it helped me understand what people search for and how to put keywords together.
http://www.veri.com/t/making-your-shop-more-relevant/3044I'm also going to suggest this article:
http://www.etsy.com/blog/en/2012/how-to-get-found-in-search/Something that can also give you tagging ideas is this helpful list:
http://www.etsy.com/blog/en/2009/seller-how-to-tag-o-rama-with-descriptive-keywords/Another idea for brainstorming tags is to type your item in to the search bar. For example, type in "Fairy Art" and click another fairy art listing. Then from there scroll all the way down the listing and click "show item details." This will show you what the person tagged their item with. Although you shouldn't copy their tags tag for tag, it will help give you an idea.
And if you still need more advice, try searching for etsy articles on tagging or join the SEO team. Good luck and happy tagging!
