For my money, this is not the best way forward from a UI point of view.

Starting with full opacity text does not tell me it will go away. Fading
the text out but leaving it on onFocus makes me want to delete it myself -
cannot anticipate you will do that for me.

Have a look at input placeholder="" implementations (via HTML5 natively
on chrome atm and the several mootools ones that add it as a progressive
enhancement to browsers yet to implement it).

The good side to using what will soon be a common place technology /
practice is that is that users get trained to recognise and interact
with these, they expect and anticipate a certain behaviour. 

Going your own way can be offputting for elderly / less saavy users that
use the mouse to select their next box as opposed to tab

Anyway, have fun 
-- 
Dimitar Christoff <[email protected]> 

blog: http://fragged.org/ | twitter: @D_mitar | mobile: 0781 007 2094

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