The breeder I got LuLu from used color collars (not sure what the collars were made of, though). The vet used the collars to distinguish the pups from one another to keep up with each pup's visits. This also allowed her to know who belonged to who after the pups acquired new mommies & daddies.
I do know you have to be very careful that the collars are adjusted as the pups grow...don't want it to get too tight!