I had flannel on hand, and just purchased one felt rectangle of each color. I kept it simple and basic. White, black, brown, red, orange, yellow, green, blue, and purple. You can add more or others if you want to do this.
I cut out a circle and the word of each color. I then laid them on about a yard of white flannel. When I decided on the placement I then used fabric glue to glue just the WORD down. The circles do not get glued down.
I then just used some thumb tacks, and pinned the white flannel.
I then gave my son the colored circle, one by one and let him place the circles as close to the colors name as possible. He is totally in to it and so is my youngest... Well, he likes to just hold the circles, and carry them around.
See The Rainbow,