I use the cotton fabric sheets that you can print straight from your home printer onto. I customize the label, print it, and then hand applique it onto the quilt.
This is ultimately what I decided to do.
Here is what I came up with:
label order for quilts: selvage, shoe, strips n curves, judaic stars
Lesson learned: leave more border around each label
Here is a link to my gallery to view the quilts:http://www.craftster.org/pictures/showgallery.php?ppuser=61629&cat=500