I stumbled onto an easy trick for making really sharp-looking labels:
After printing and cutting out your custom labels, spray them with two or more coats of spray lacquer (available in the paint departments of hardware stores). This does several things: 1) Deepens the color in the label and gets rid of that fresh-from-the-ink-jet look; 2) Gives the labels a nice-looking sheen, and 3) Makes the labels water-resistant, so the ink doesn't smudge as soon as condensation occurs. Each coat takes only 30 minutes or so to dry.
I found full-sheet label stock (like Avery number 8165) very handy for printing, and it took the ink-jet ink very well.
This works great for gift bottles, though might not be worth it for everyday drinkin' brew. I haven't yet tried to remove the labels; it could be a PITA.
Cameron