I generally use normal boring labels, then modernizer to detect if the browser supports placeholders, if so hide the labels and add placeholders to the attributes
Oh, also... once you're in the field, the placeholder disappears and you have no idea what you were meant to type (which is why the plugin slides to the side by default).
I had looked into doing this with pure CSS, but I hit a roadblock. I can't remember what it was, but it may have been the Firefox thing mentioned. Would be cool to add a css file that does the same to the project when the support is there though.
how do you get the labels back again? sometimes my browser or password manager fills in the wrong fields, and, once there's something in the fields, there's no labels.