This happens because when you click the 'Add' button in the Collection Editor (a standard editor for the property grid) it creates a new item using a supposed public parameterless constructor, which doesn't exist on System.String (you can't do var s = new String();).

What you can do though, if you want to keep the keepLabels property as is, is to create a custom editor, like this:

// decorate the property with this custom attribute  
[Editor(typeof(StringListEditor), typeof(UITypeEditor))]
public List<String> keepLabels { get; set; }

....

// this is the code of a custom editor class
// note CollectionEditor needs a reference to System.Design.dll
public class StringListEditor : CollectionEditor
{
    public StringListEditor(Type type)
        : base(type)
    {
    }

    // you can override the create instance and return whatever you like
    protected override object CreateInstance(Type itemType)
    {
        if (itemType == typeof(string))
            return string.Empty; // or anything else

        return base.CreateInstance(itemType);
    }
}