A pretty handy feature when you're trying to remember who's who for a large group of people that you've just met. Labels include: mother, father, parent, brother, sister, child, friend, spouse, partner, assistant, manager and so on. If the default labels aren't enough for you, you can add your own custom labels if you wish.
But for those of you who are concerned with privacy issues, fortunately it's not compulsory for you to fill the details in. But seeing that this features has been available for Mac OS X for awhile, I'm sure a lot of users who utilize it on their computers will enjoy having this feature on their iOS devices.
source: Ubergizmo