Beat butter, sugar, vanilla, food color, egg and cream cheese in large bowl with electric mixer on medium speed, or mix with spoon. Stir in flour. Cover and refrigerate about 2 hours or until firm.
Shape dough into 1 1/4-inch balls; roll in red sugar. Cover and refrigerate 1 hour.
Heat oven to 375ºF. Place balls about 2 inches apart on ungreased cookie sheet. Make 6 cuts with sharp knife in top of each ball about three-fourths of the way through to make 6 wedges. Spread wedges apart very slightly to form flower petals (cookies will separate and flatten as they bake).
Bake 10 to 12 minutes or until set and edges begin to brown. Immediately press 1 candy in center of each cookie. Carefully remove from cookie sheet to wire rack.