Yeah you won't immediately see any evidence of vertex colors when you import your model unless you apply a shader/matarial that uses them. If you import the Standard Assets (Mobile) unity package into your project there is a Mobile Vertex Colored shader in it. Right click that shader -> Create -> Material. Then drag the…
Sorry to necropost, but I built a vertex painter Editor tool in Unity3d. It also includes 9 blend shaders. You can paint vertex color in the editor, as well as paint skinned cloth weights. http://dl.dropbox.com/u/18986451/GrantSimpleSoftware/gss.html
What I'm considering now is low rez diffuse, mostly flat colors for characters, and straight up vertex painting for buildings and props. Thanks for your guys' help.
Thanks Ben, that does work. Will it be impossible to use vertex colors with say, the toon shader? (I think Nintendo did this for Zelda WW) Or am I forced in having a diffuse with the flat coloring/style I want.
There are little touches all over that model that show they used a mostly flat diffuse anyway (boot creases, edges of the tunic, lips, not to mention shield and sword). Wouldn't it be possible to frankenstein a new shader out of the vertex color and cell shading ones?