Mastercoin currently has almost no code at all. Code may or may not be developed in the future using collected funds. The code that already exists for colored coins is ahead and is still actively developed.
It's being tested and it looks pretty good. I've seen Colored Coin code also and it looks good too but there is no implementation that I can find of Colored Coin which works. Maybe if you can find some implementation to show then I can change my mind but as of right now neither seem to have functional implementations.
Anyway let the best technology win. I'm following both.