I find it easier to use theme functions to alter the forms - in your theme's template.php just create this:
function YOURTHEMENAMEHERE_user_login_form($form) {
$form['submit']['#value'] = t('Sign in');
//dsm($form);
return drupal_render($form);
}
the commented out line (dsm) is for the Drupal devel module - which I'd also recommend installing. Once you've installed this and set permissions on your admin role so that you can use it, you'll get a new tab which shows you exactly how the page is constructed and which arrays do what.
Follow the trail within the arrays and you can pretty much theme anything on your site.
EDIT - oh ok :P The one thing I notice, not having used this hook before, is that the example in the API has 3 variables in the function, but you've got 2! Having a mismatch means you're probably being fed the wrong variable:
function modulename_form_alter(&$form, $form_state, $form_id) {
switch ($form_id) {
case 'contact_mail_page':
$form['submit']['#value'] = t('Sign in');
break;
}
}