Here's a little comic relief for you. First of all let me say, I didn't make this up. This is a screenshot from the website of a big, well-established company's website. I won't reveal the name of the site in order to protect the innocent.
This started out as a typical registration form. The label (Name, Address, etc) was inside the input box which conserved space . When you focus on the field, the label disappears so you can enter your value. However it didn't specify which fields were required. So, since I don't like registering, I just tabbed through all the fields without filling out anything. This is what it showed.
Nice. Now I know that all the fields are required... Now what goes in each field again? The worst part, refreshing the screen doesn't bring the labels back. Nor does submitting it. Now in the site's creators defense, after a little refreshing and clicking in and out of the fields, I was able to get it to show the labels again. But would most users?
Do your users a favor and don't do this.