It isn't free but. “Discus is, bar none, the best labeling software I have come across (and I've tried quite a few different ones.)"
It costs around £22. It has a massive Art Gallery and it has templates for almost every type of paper labels and also, if your printer can print direct to CD/DVD it has a template for that as well. I have an Epson R220 which can print direct to CD/DVD so I don't use paper labels any more.
Unfortunately, because of its size you can't download it. It comes from the States. There is a DEMO (30 days) that can be downloaded to try it out.
Note: You need XP to run Discus 4. If you haven't got XP choose Discus 3 which will run on any Windows O/S prior to XP.