1. Download and install SIMBL for OS version Snow Leopard and Leopard or Tiger
2. Download the ColorfulSidebar SIMBL plugin and mount the DMG file
3. Move the ColorfulSidebar.bundle into the following SIMBL plugin folder:
4. Restart the computer
5. Kill the Finder through the Terminal: killall Finder
UPDATE: Interestingly, on two different Macs the tip applies differently. On the BookPro it works perfectly, on my Air I have to repeat the killall Finder every time I restart the laptop to get colored icons back.