This is what I use now

jQuery Placeholder.js

(function( $ ){

    $.fn.placeholder = function() {
        var id = 0;

        return this.data('placeholder') ? this : this.each(function(){

            // Create label
            var $this = $(this)
            ,   label = (function( props ) {

                    // Create label
                    var elem = $('<label />', {
                        'css' : {
                            'position' : 'absolute',
                            'color' : '#999999',
                            'cursor' : 'text',
                            'float' : 'none'
                        },
                        'for' : (function( e ) {
                            if ( ! e.attr('id') ) {
                                e.attr('id', 'placeholder_' + ++id)
                            } 
                            return e.attr('id');
                        })( $this ),
                        'text' : $this.attr('placeholder')
                    })
                    ,   display;

                    $this.removeAttr('placeholder');

                    // Copy properties from the original input
                    $.each( props, function( i, v ){
                        elem.css(v, $this.css(v));
                    });
                    
                    // Hack because Firefox is bad at
                    // calculating line-height
                    if ($this.is('input')) {
                        elem.css('line-height', $this.css('height'));
                    }
                    
                    // Make sure the parent is relatively positioned
                    display = $this.parent().css('position', 'relative').css('display');


                    $this.parent().show();
                    // CSS doesn't have the += operator, and I'm lazy
                    elem.animate( $.extend({
                        'padding-left' : '+=' + $this.css('border-left-width'),
                        'padding-top' : '+=' + $this.css('border-top-width')
                    }, $this.position()), 0);

                    $this.parent().css('display', display);

                    // Return the newly created placeholder label
                    return elem;

                })( 'font-size font-family font-weight padding-left padding-top margin-left margin-top width height line-height text-align'.split(' '))

            // Add to document
            $this.before( label );

            // Show label if input is empty on blur
            $this.bind('blur change keydown', function(){
                setTimeout(function(){
                    
                    if ( $this.val() ) {
                        label.hide();
                    } else {
                        label.css('color', '#999999').show();
                    }

                }, 10); // Timeout fixes input masks
            }).bind('focus', function(){
                label.css('color', '#cccccc');
                if($this.hasClass('hideOnFocus')){
                    label.hide();
                }
            }).blur();

            // Save reference to placeholder
            $this.data('placeholder', label);
    
            $(window).resize(function(){
            
                label.css( $this.position() );
            
            });

        });
    };

})( jQuery );

Let's make this a repo?