How to create mailing labels from Google Apps

After much experimenting here is a way to do mailing labels from your Google Apps for Business/Premier Edition contacts:

1. If you're only using Google Apps from the web interface, install Google Apps Sync for Microsoft Outlook (requires Business Edition), don't import anything, run it, and allow it to finish loading your contacts.  No need to wait for it to sync the first 1 Gb of your email.
2. Open Microsoft Word (2007 or 2010 in my case), choose Mailings, Start Mail Merge, Labels, and select your label format.  Mine was Avery US Letter 5160 Easy Peel Address Labels.
3. Click Select Recipients, Select from Microsoft Outlook Contacts.  (You can fine tune the filters and the list of contacts again later by clicking Edit Recipient List from the toolbar.)
4. Click Address Block, Match Fields.  Beside "Address 1" choose "Home Address" or "Business Address" appropriately.  Change all the remaining address fields such as "City" to "(not matched)".  Since addresses in Google Apps are free format they don't parse consistently into the appropriate fields so choosing Home Address in Address 1 and clearing the rest of the fields gets around this problem.
5. Click Update Labels to make all the labels the same format.  Click Preview Results.
6. Select All (Ctrl-A) and change fonts, sizes, and line spacing according to your preferences.
7. Finish and Merge to a new document for further editing or send it to the printer.  You're all done!

P.S. I tried exporting the contacts into Google csv or Outlook csv format,  and converting them to an Excel spreadsheet using Excel or Google Spreadsheets but this gave me too many issues with the formatting of the addresses.  Maybe your contact list is cleaner than mine.  If you know another way that works well please share the knowledge and post a comment.

Family members, your Christmas cards on their way...