Having just gone through a Colors marathon prior to getting this game, I think I'm preferring Colors more but only slightly.
From a Modern Sonic point of view, Sonic in Colors is more capable. There are a few handling tweaks here and there that improve the feel of Modern Sonic in Generations, but he can't wall jump everywhere (needs panels), "true" double jump (it's back to empty homing dash), or jump spam while swimming. So, with that gone (and the drill wisp gone), say goodbye to the miracle/revelation of Sonic Colors: water levels that were actually fun to play. They're not exactly bad in Generations, though, so no worries.