I've often thought about how dull a lot of NPCs (mostly the enemies) look. I mean for example, High Kinlady Estre, went from wearing a golden/green dress to wearing a black dress when fighting, so I wouldn't mind more colourful themes for enemy NPCs, and I generally think that's a trend (I remember another friend-to-enemy NPC with the same problem) It may be lore, it may be fashion choices, what do I know.
What I would mind though, is if armor in game were big bulky colourful armour a la WOW, since that is one of the reasons I don't play that game, and also why I at first was hesitant about even trying out an MMORPG. I'm glad ESO despite it's lack of colour looks the way it does.
As for the player character, generally I like to put colours on my characters, because I like for them to stand out in the open fields, but I wouldn't want shoulder pieces so big that I have to walk sideways through doorways.