The folks at Nielsen Norman Group have done some research and determined that instructions within form fields often hurt usability more than help it.
Labels tell users what information belongs in a given form field and are usually positioned outside the form field. Placeholder text, located inside a form field, is an additional hint, description, or example of the information required for a particular field. These hints typically disappear when the user types in the field. While they can make your form appear less cluttered, they can also hurt your chances that users will successfully complete the form.
See the research results.