We did 800 2"x8.5" waterproof labels on water bottles for a wedding a while ago. We actually had a local sign company print them on 60" wide outdoor vinyl. I think we paid either 28 or 35 cents a label which included cutting etc. Worked great sitting in coolers of melting ice. No bleeding or adhesive issues. A little pricey compared to some other options, but I was really worried about adhesion and the ink running.
I would call up discountlabels.com and ask them what they suggest. Those guys are dirt cheap and know everything when it comes to stuff like this. I wish I had known about them at the time...
