Just gotta big note myself for a bit...
We've had a *lot* of dogs in our time...lotsa different breeds and mixes. At one point we had 23 dogs in various stages of maturity. All of them, except the youngest pups knew that there was a 'no biting' rule in our pack. That is, absolutely no mouthing of people or their doggie pack. I'd love to show you some pics of them playing (might do if this thread continues). There was also a rule of 'no jumping'. We implemented this rule so that our dogs wouldn't jump up on kids as a sign of affection. They also, all except the 8 youngest pups that were learning the rule, would sit until we said "OK" at feed time. It's pretty cool to see 15 dogs all sitting and waiting until all the bowls are filled and then waiting for the OK. They all came when called without hesitation. We loved our pack...had to give all except one away when we moved back to town...
Anyway, I'd suggest being the pack leader and teaching him that it's bad form to mouth or nibble. You can do what King Papawawa suggested with the scruff of the neck shake and a big 'no biting'. That's a very strong signal in the dog world, because it harks back to severe puppy discipline from their mother. Just re-inforce it every time he/she does it. After a while (in our dogs' cases), they would sometimes forget and put their mouth near an arm or whatever. "No Biting!" was all it took for them to remember. You could see the "Oh, sorry dude" look on their faces.
Consistency in your actions are what they understand and respect.
For the record, we rarely used harsh discipline on our pack. The worst was a severe shaking by the scruff of the neck and then a hold down with lots of angry words (much like growling and snarling at them but in human terms) if they did something really bad, like going walk about when they weren't supposed to. It was rare, but we had one of our spoiled girls who would lead the others astray. She just couldn't stay around the house when there was thousands of acres around her to explore.
Seamaiden, Lucy and blinkykush are all right on the button re dogs. You are their leader and therefore you have to show them leadership. Otherwise they'll do what they want and start to consider themselves a contender.