This replicates the functionality of the standard embeddable Google Search fields. They have an image in the background and when the input is clicked into, the image disappears.

<form name="searchform" id="search-form">
   <div>
       <b>Search</b>
       <input type="text" name="txtInput" title="Enter the terms you wish to search for." />
       <input type="submit" value="GO!" class="submit" style="cursor: pointer;" />
   </div>
</form>

JavaScript underneath form markup:

<script type="text/javascript" language="javascript">
 (function() {
    var id = document.getElementById('search-form');
    if (id && id.txtInput) {
      var name = id.txtInput;
      var unclicked = function() {
          if (name.value == '') {
              name.style.background = '#FFFFFF url(images/googbg.png) left no-repeat';
          }
       };
       var clicked = function() {
          name.style.background = '#ffffff';
       };
    name.onfocus = clicked;
    name.onblur = unclicked;
    unclicked();
    }
  })();
</script>

View Demo