Here is a step-by-step set of examples, with screenshots, of why using placeholders (we don't care if they are HTML5 or JS or fancy CSS) instead of labels outside inputs is retardation and hateses the users, hateses them.
My current company is doing this right now, with e-commerce. Joy. I'm not allowed to change it. More joy. I should just shoot myself now.
This is pretty much more of the same: other usability articles have shown users doing the same thing over and over: they doubt or wonder about whether they've put the correct data into the input, and must remove it to be certain. I imagine this must be very hard for the "did I leave the oven on?" OCD crowd.
Hell, users will doubt and wonder just based on the size of the input: if it's that big, I might have misread the label when I put in only 3 letters... maybe I should re-read it or think about it some more... and how do I fill out "Prefix:"? What's a prefix? Something on my name??
Luckily this craptastic trend in placeholders-make-damn-sexy-labels can help increase form abandonment, which is a good thing: anyone who cares more about graphics in their forms than that they work right for our Lowest Common Denominator (who we build forms for) probably didn't want us retards filling them out anyways.