I made my own labels, and they came out great. I used a printable cotton (by Avery) that has fusible backing, which I didn't realize at the time I bought it. So, I fused the labels to 1/2 inch twill tape.
My labels have four lines:
Made by my name
my Etsy address
my city, state and country
the date
This worked perfectly, except that it looks horrible on my little test Gnome. The tag is half as long as the toy, it just gets in the way, and there really is no logical place to sew it on anyway. I feel like I've done all I can to get tags on my items, it just doesn't work. I'm going to have to go back to hang tags. I plan to have my logo, shop name and address on one side, and the made by me, location, and date bit on the other with a "please keep this for your records" line. I know they don't prefer it that way, but I really tried everything else.
The labels themselves are perfect, really, and making them wasn't difficult. I can take pics when I get home from day-job if you want to see. The labels are fine, I have to admit that my items are just too small for them.