I do believe that labels can play on misleading stereotypes. For instance, I identify as asexual--I don't experience sexual attraction to anyone. For most people, that comes with the assumption that I'm cold, asocial, and don't have meaningful relationships. In reality, I've been in two long-term romantic relationships (several years each), and I'm fully capable of love. It's just that for me love comes without sexual attraction.

I think a lot of the problems with relying on labels result from people not fully understanding the implications of the label. Of course, we can't expect everyone to be knowledgeable about every label out there. I think the best we can do is to be aware of the assumptions we make about others and be willing to revise our view of them.