I seem to have run into an issue with 2008.
In 2007, it was possible to use any style as a default. But in 2008, it seems that it is only possible to use top-level styles as defaults.
For example, create a Surface Spot Elevation style "Parent" with a child style "Child". Right-click on the "Surface" collection in Toolspace->Settings, and select "Edit Feature Settings". Try to set the default label style for a Surface Spot Elevation. It is possible to set the default to "Parent", but not to "Child". In 2007, this worked fine.
I think this is a bug.
Sinc