Scott, Civil 3D's focus is to make the labels an appropriate size for paperspace, regardless of the viewport zoom. Therefore, set
your label size to a comfortable reading size in paperspace, say 2.5mm or 0.1", then go into your Toolspace|Settings|right-click
Drawingname|"Edit drawing settings..." and modify the Scale factor (top-right corner) in the Units and Zone tab till your labels are
readable in modelspace as well.
Hope that helps,
Trevor