Here is my recipe, stole from Chow.com.
3/4 C butter (softened)
3 ounces cream cheese (softened)- I've used Laughing Cow soft cheese since they are in 1 ounce sections.
1 C white sugar
Cream and fluff, then add
1 t vanilla (or other flavoring)
mix well, then add
2 3/4 C flour (More or less based on the texture... you want it to look like a sugar cookie but not enough to roll out until cooled.)
1 t baking powder
1/4 t salt
mix well, separate into equal parts, then add coloring.
Each section will be tacky and hard to handle. Mix as well as possible. I usually do it with my hands and then just wash up well. :)
After mixing the coloring, cover each ball in clear wrap, tight as possible. Place balls of dough in fridge, set for 2 hours. When they come out, you can mix the coloring in further since they will be easy to handle by now.
Have fun! Warning: this makes more than you think. I usually fill up 3 to 4 industrial size cookie sheets. Place on greased cookie sheets. Sprinkle sugar on top (optional), bake on 350 for about 10-15 min. depending on how thick or thin your pieces are. You only want the edges to be lightly browned.
Tip: If you choose to put them on sticks, like fun lollipops, make sure you dip the sticks into beaten egg whites so they stick and don't come apart with baking.
Allow to cool and enjoy your creations. :)
Let me know if you have any questions! - Veronica