I've been adding a couple of people to my friends list, and it's been a bit of a chore assigning them colours.
My friends style is based on "Default Friends View", which uses a column at the left-hand side with the friends colour.
I usually read from the bottom up; this way, I can often see who has written an entry even before I scroll far enough up to see the author's name (name and userpic are centered vertically in the left-hand column), just from the background.
Of course, this requires that everyone have a distinctive background. So far, there haven't been many collisions, and there aren't many people with default colours (black-on-white), but it's getting harder, when adding a new friend, to remember which colours have been assigned and to pick a combination that'll be memorable.
What helps a bit is that I sometimes group related journals together (for example, someone's personal journal and support journal would be the same colour, or lj_maintenance and lj_test have the same colour since they're both "system journals"). Still, interesting.
I wonder how many LiveJournal users use friend colours.