That well-informed people will make rational decisions in their own best interest is a fundamental "free market" principle. In the case of genetically modified organisms, the lack of a label that tells the consumer whether or not a food is a GMO denies her the ability to make an informed choice, as this attribute is not visible to the naked eye. Thus GMOs continue to proliferate in the marketplace covertly, given competitive advantage by dint of the consumer's ignorance.
Proposition 37 would require such labeling. Anti-37 interests argue that this is unnecessary because the safety and health issues of GMOs have been scientifically resolved in their favor, and labeling would only "confuse" people.
(Don't like the so-called nanny state? The corporate version looks worse to me, as it employs ignorance to ensure profitability, health concerns be damned.)