For others who may be landing on this question, there was an additional step for me to get the default option to appear. In my case, the v-model I was binding to was returning null and rather than an empty string. This meant that the default option was never selected once Vue bindings kicked in.
To solve for this, simple bind the value property of your default option to null:
<select v-model="age">
<option :value="null" disabled>Select Age</option>
...
</select>
http://jsfiddle.net/2Logme0m/1/