The color of magic is octarine, and it's a shade of greenish-purple. At least, that's what it looks like to Rincewind (4.4.28). But what does greenish-purple have to do with the book The Color of Magic? Not much.
Instead, the reason the novel is titled as it is has more to do with the properties of octarine than the actual shade of the color itself. On the Discworld, octarine is the "eighth color" (1.18.1) of the light spectrum, meaning the denizens of the Disc get to see the world with a whole extra color than we do. It is also described as:
[…] the King Color, of which all the lesser colors are merely partial and wishy-washy reflections. It [is] octarine, the color of magic. It [is] alive and glowing and vibrant and it [is] the undisputed pigment of the imagination, because wherever it appeared it was a sign that mere matter was a servant of the powers of the magical mind. It [is] enchantment itself. (4.4.27)
The fact that octarine is the "color of magic" and the "pigment of the imagination" is telling when considering the title.
The novel is very much an homage to the fantasy genre, even if it pokes fun at it at the same time. The importance of octarine is that it takes imagination (read: the very foundation of the entire notion of fantasy) and gives it a physical form within the world. Imagination becomes an intricate part of the make up of the world in the same way light is so intrinsic to our world. Magic and imagination become a part of the way these characters—and, yes, the novel's readers—literally see the world.
The title, A Color of Magic, points to this fact, noting how important imagination is within the context of the story and all future stories taking place on the Discworld.