I came across a book that had been withdrawn from a library that had a foil backed label. It had held up quite well.
I'd suggest regular labels (perm. adhesive) and cover with protective plastic label protectors which will protect from smudges and wear and tear. Don't use regular labels without protectors.
I suggest that you look at the options in Demco catalog (library supplies catalog). If you need a catalog, 1-800-356-1200. I like the paper adhesive labels as the foil ones can be shiny and hard to read. I agree, be sure to put the 2 or 3" tape on the spine to cover the label or your can purchase protective labels by the package.
Foil labels are more adhesive, but I don't think they are really needed because we should cover them and the regular labels work just fine. Many use individual protective labels which are great. However, since we cover all of our paperbacks with a product called KAPCO (other coverings work well also) we place the labels on the books before covering them and that gives them great protection. As for hard covers, we cover the paper jackets and place labels on them before covering. We started laminating the paper covers a few years ago and that works great.
As far as labels are concerned, I recommend the longer label. Now so many of our call numbers have three or four lines those labels work well.