In large bowl, combine all ingredients except flour and colored sugar; beat until light and fluffy.
Add flour; mix well. Shape dough into 3 disks. Wrap dough in plastic wrap; refrigerate 1 hour for easier handling.
Heat oven to 375°F. On floured surface, roll out 1 disk of dough at a time to 1/8-inch thickness. (Keep remaining dough refrigerated.) Cut with lightly floured 2 1/2-inch round or desired shape cookie cutters. Place 1 inch apart on ungreased cookie sheets. Decorate with colored sugar.
Bake at 375°F. for 6 to 10 minutes or until light golden brown. Immediately remove from cookie sheets. If desired, frost and decorate plain cookies.