That's right. The right name is "start()".
For what you say, it seems more likely that the labels are created well, but for some reason, they aren't displayed properly. Reason is that they are created in start(), since start() is only called when starting a new scenario and labels appear when reloaded the savegame, it only makes sense that labels are already there, but for some reason, not shown properly.
By the way, after doing some research, if you try to create a label where there's already one, that new label is silently ignored. Labels are kept in a global array, the index of which is the coordinates of the tile.
The more I use the scripting interface, the more I like it. It's full of potential.