I could not agree more. Windows Live/Essentails Photo Gallery is the best tool for keeping the file as the source of record. I evaluated several photo face tagging tools and it was the best as far as leaving meta data in the file and updating the file information properly. Picasa and Photos/iPhoto just couldn't seem to do it and each has a separate database.

Check out this post from 2006 where they talk about it and some cases where they can't "truth in the file" that seem like a very reasonable list of circumstances. http://blogs.msdn.com/b/pix/archive/2006/08/16/702780.aspx