My two cents on this topic is that it doesn't hurt to submit a well-organized application. Whether you choose to label or not depends on the complexity of the application and the amount of documents. When we submitted the immigration application for my husband, it was fully labeled with tabs, due to the amount of documents being sent in. For the citizenship application, we did not label anything, but we arranged documents in the order specified in the checklist.
At the end of the day, CIC officers are people just like you and me who appreciate when their job is made easier.