Comment 6 for bug 881864

As far as I can tell after some more looking around, this is an intentional feature removal in upstream, and no bug entry exists there. There was a notice to the mailing list http://mail.gnome.org/archives/nautilus-list/2010-July/msg00023.html and its corresponding commit http://git.gnome.org/browse/nautilus/commit/?id=915e5523947fe049e06f9bd8574760f6765e8ad7

For the time being, a similar functionality as emblems can be achieved by changing the complete icon of a file or folder: In the properties dialog, on the Basic tab, click the icon (it looks like a button for a reason...) and navigate to an icon of your choice.