Pretty sure this is a current limitation of the Viewer for Silverlight. Either use the entire Map Service or no labels.
My work-around was to publish several different services, so at least there isn't one huge group. So for instance, Stormwater Pipe labels are visible when they're viewed as part of their Stormwater Reference Data map service, but the labels aren't visible if using the Feature Service layer dropped in the map above them. Other types of data (Sanitary, Water) are their own groups.
This plus the lack of true layer 'groups' (besides the map service work around) are my biggest issues with Viewer at the moment.
Good luck,
Eric