For those that use labels in Gmail, this new feature is pretty cool and useful. For those that don't know, Gmail uses labels instead of folders - the benefit of that is you can tag an email with multiple labels so it's like putting the email in multiple folders without actually creating a bunch of copies of the email.

Now you can find boxes next to the labels in the left side (see the picture below) that let you select from a list of background and text colors so you can make different labels stand out better than the previous green text that was the same for all labels.

(Picture via Google Blogoscoped)

The feature will be handy for those who archive all their email as well as those who leave it in their inbox. And you can setup filters that can automatically label your incoming mail based on rules like who the email is from or what the subject is, so you don't have to do it manually for mail as it comes (filtering is not new).