I've got an HP printer that can print labels on inkjet-printable discs.  I strongly advise against stick-on disc labels.  They can melt while spinning, ruining both the disc and the player.

Has anyone used the Lightscribe feature that comes with some burners?  If so, are you happy with the results?  From what I can see in can only label in two tone colors.

I use Lightscribe as it's my current best available option without buying a new printer. I use gold DL Verbatims, and the results are very good (although it's obvious that it's a bootleg disc). That said, I would much prefer to have colour labels that cover the entire surface of the disc (Lightscribe discs have less available surface area). But it's still better than using a Sharpie!

Regarding the colour, it's comparable to printing in Grayscale, but with whatever colour your disc is.