Should textbox labels be above or to the side of the textbox?

At a former employer, the interface guidelines strongly insisted that the labels for form elements are always above the element citing that

  1. It's more natural to follow
  2. It's easier to translate since the sizing won't need to change.

However, I often see this violated by placing the label to the left (or to the right for right-to-left languages).

Which is the better general approach?