It depends on how you define colour-blind. The version of that urban myth that I've heard is that they see in black and white, and that's just not true. If you look at a dog's retina, the thing that turns light into neurochemistry or electrical signals, there are structures in the dog's retina called cones. These are identical to structures in the human retina called cones that can see coloured parts of the visual system. So dogs can definitely see colours. But if you analyse those cones, they paint a very different picture of what dogs see of the world than what humans do. The best description is that dogs are the equivalent of human red-green colour blindness. So they have a spectrum of colours that means they are pretty good at seeing greens, violets and blues, but at the red end of the spectrum they're less good. They probably appreciate it as a slightly different colour, such as yellow. But they're certainly not colour blind.
Above quote is taken from http://www.thenakedscientists.com/HT.../question/947/
I found similar information on many other sites. Dogs are also said to have much better night vision than us and notice movement move than we do.
The flags I have seen are white. My neighbours have put the flags in one area where there is no buried line so the dogs cannot get shocked but they still do not go past the white flags.