Yahoo is releasing a new version of its toolbar with a powerful new bookmarking feature that integrates seamlessly with Yahoo web search, and features a "radical" new user interface.

The new Yahoo toolbar has an improved search function that uses an auto-complete feature to make suggestions as you type. Yahoo has also made it easier to create your own custom buttons on the toolbar. If you want to create a button that takes you to a particular site, enter its URL and Yahoo will automatically search for the site's favicon logo and use it for the button, if one is available.

The new toolbar goes beyond simply saving the title and URL of a web page, which is what most bookmarking tools do. Instead, the new Yahoo bookmarks service stores a thumbnail image of a page, and optionally save the full text of a web page.

Adding a thumbnail image to a bookmark helps recall—it's easier for people to remember an image of a page than it is to recall what a page is about from a simple title and URL, in most cases.

Yahoo has also made it easier to organize your bookmarks with this new version. "If you have a huge list of bookmarks, the new version of Yahoo bookmarks allows you to organize those in a very convenient fashion," said Tomi Poutanen, Yahoo's director of product management for social search.

The bookmarking feature uses folders as an organizing scheme. You can save a bookmarked page directly into an existing folder, or create a new one on the fly as you're saving a bookmark. You can also manage your bookmarks later and create as many new folders as you like.

You can also add tags to your bookmarks, again either when you initially save one or later. If you check the "use tags" box as you're saving a bookmark, Yahoo will suggest tags to associate with a page, but I found these suggestions ranged from unhelpful to downright worthless as meaningful tags for most of the pages I bookmarked.