I haven’t noticed any problems but in the read me it says to do the following for upgrading:
5) In the ExpressionEngine control panel, select the ‘modules’ tab.
6) Find ‘Tag’ in the list of modules and click ‘Tag’.
7) The new software will detect that you need to upgrade and will present an upgrade link in red in the top portion of the page.
8) Click the upgrade link.
9) Done.

I got to 6 and I guess 7, but there was no upgrade link. It does work however.

I did notice in the extention manager it shows tag as being version 2.0.7 instead of 2.1

Don’t worry about it… your Tag has been upgraded

As for the Tag Extention saying 2.0.7… it’s supposed to, as that’s the version of that file

If you look in your Modules list, the Tag module should be listed as 2.1, correct?