I want to be able to create more groups that a server is a member of. For example, I want to see all Production servers, or all servers associated with a specific team or department. I can group by only 1 item now. But, if I could tag servers, that would allow me to be more granular in my reporting.

We do the same thing in VMware now. We can still use the same grouping structure that exists today, just create the ability to provide multiple tags to each server/instance.