The thing with labels is that it is fine if your units are on a single base. Works very well with ships and units in games like Impetus. Once you get onto multiple bases to a unit, they can start to detract from the visual effect of a unit. I mean how would it look if you formed two ranks with a unit that consisted of 6 stands? Labels in between the two ranks wouldn't look right, would it?
Neat idea snowman! Al, you've got it - all the visual effect of having a mass of troops is distracted by the little labels. For ECW, colour will be enough to differentiate my units. If I had Austrians, Russians, or Prussians, the banners alone would be enough to work. British have both banners and highlanders that will stand out. The French have virtually all the same banner, with just a tiny little "26eme" on the flag. Too hard to see.
I do all my 28mm Napoleonic's on movement trays. I have enough for Lines and columns however you don't actually change formation that often so it isn't as much a pain as you might think. I do small labels for each unit and attach to the back of the movement tray with a small bit of blue tac. This enables it to be easily and quickly changed to the new movement tray. The trays improve speed of movement, deployment, clear up and storage whilst protecting the figures from regular handling. When you look at the rear of your army the labels give you a nice feel as you can see the identification of each ie: 1st Bn/2nd Ligne, 2nd Bn/2nd Ligne etc.