[Pewpewarrows]

That's only half of the argument. The other half being that, after having text in there (say, in the edit form of a CRUD app), your user no longer remembers what that field was supposed to represent to begin with.

[jaggederest]

Probably browser-specific, but some browsers will show the placeholder or label with a hover, as well.

[gedrap]

But hovering to see the label is not intuitive at all

[lancefisher]

You can't really hover with your finger on an iPhone.

[Raphael]

You can set the title attribute to the same as the placeholder.