I know this is very simple and most probably use some form of it already, but I print order labels from x-cart regularly. My problem was that the layout for these labels was very jagged and messy to say the least, so every label required a lot of formatting to get it into address format. I did 2 things to fix this and save myself a lot of work. First in the Admin Panel under States I changed all of the state names to their correct abbreviations. This way the postal abbreviation shows up everywhere, including the label. Who uses full state names anyway? It isn't as if the credit card companies need that.
Next open this file:
skin1>main>order_label_print.tpl and replace the code after the first line with this:
Code:
{$order.tracking}
{$customer.s_firstname|default:$customer.firstname} {$customer.s_lastname|default:$customer.lastname}
{$customer.s_address}
{$customer.s_address_2}
{$customer.s_city}, {$customer.s_state_text} {$customer.s_zipcode}
{$customer.s_country_text}
That should give you a nicely laid out label to print!