Once you've tagged a few people, iPhoto will begin making suggestions as you continue tagging people. Not surprisingly, this can be a hit-or-miss process, particularly when you first get started. In some cases, iPhoto is able to correctly identify people across your library after they've been tagged once, while in others you may need to tag people in dozens of photos before the software begins to correctly identify them.
For libraries that contain images of the same people at different ages, particularly children, tagging a variety of photos seems to make the process of identifying them more successful. My iPhoto library, for example, includes family photos of me spanning three decades. Tagging photos of myself as a toddler and as an adult, iPhoto did a surprisingly good job of identifying potential photos of me as a child, teenager and as a grown-up.
Faces also includes a library view of all the people that you've tagged. Double-clicking on someone's entry will display both the photos you've tagged of that person as well as photos that Faces thinks contain the person but which you haven't yet tagged. From there, you can confirm or reject iPhoto's guesses, which tends to be a faster way of training Faces once you've done some initial tagging.
Faces can be used to build smart albums very easily. Simply select one or more individuals in the cork board view showing people you've identified and drag them to iPhoto's sidebar. This creates a smart album of all photos containing those people and updates it as you identify them in additional photos. (You can also create more granular smart albums using the traditional smart albums dialog box that combines Faces, Places, Events, dates, keywords and other criteria.)
The second big organizational feature in iPhoto '09 is Places, which uses longitude and latitude geocoding information to group photos by where they were taken. Places relies on Google Maps to decode the location information and associate it with an address. Places also includes a library of points of interest such as the Washington Monument or the Empire State Building that it can display instead of a generic address. And you can add your own points of interest for things like houses of family and friends, local restaurants and clubs or parks and monuments not included in the overall library.
Places is a really fun feature because in addition to a static list of locations where you've taken photos, you can view a map of them with support for Google's map/terrain, satellite, and hybrid views and a pin will identify the points of interest. You can also browse locations listed by country, state/province, city and individual addresses, making it easy to view very specific locations or more general ones. Maps can also be used in photo books including the new "Maps" themed book; it's a great addition to the already beautiful photo book printing options.