Using the pathauto and token module in Drupal 6 allowed you to create url aliases using a pattern like so: [termpath-raw]/[title-raw].
However, this is not the case in Drupal 7. I understand that D7 is still in alpha, but the beta looks to be here pretty soon and it is soooo much nicer that D6 IMO.
Is this functionality not available yet?
In Drupal 7, the word path means something very specific, and apparently something different than what termpath would refer to, and it doesn't look like there's any been action taken to replace the [*path] tokens just yet (although it's a known issue): BIKESHED: Token for a term or menu item's entire tree/hierarchy.
It also looks like it's not going to make it into core, and will stay a part of contrib Token, and even #D7CX-pledged projects have until final release to complete their Drupal 7 ports, which could feasibly be close to the end of the year.
Token module co-maintainer here. There's more at work here because taxonomy tokens are not quite simple. They're now fields, and we haven't written token support for D7 fields yet. It is something we have to get done though.