To see which outfits come in which colors, click on the Sim's outfit (whichever category it is)to pick outfits for your Sim.
To change the color, click on the piece of clothing that comes up when you select, for example "suit jackets." You will see icons next to the Sim that you are trying to dress (suit jackets, tops, etc.)
Once you have the piece of clothing you want your Sim to wear, you will see a "line" of colors, in which that article of clothing comes under it. Just click on the color in the "line" to change colors.
I've only played TS4, but I've heard about how it was in TS3, and I understand that TS4 does this differently. I've seen screenshots of Create-a-style.