Re:I find it annoying (Score 1)

Labels are labels, and they are a poor substitute for folders as all your unread, read and archived mail is munged in together.

A real equivalent of folders would be saved searches (eg. All unread messages with this label, All starred messages from this domain). That would work, fit nicely in to the overall design, and promote one of googles strengths. I'd even suggest it, but funny thing about this beta test is there is no obvious way of providing feedback when I find bugs (__NEWLABEL__ anyone?)