What type of colors/paint should i use?

Watercolors might work, but if I were you, I would use acrylic paint. You use water with it to mix with your colors to make them thinner and easier to apply and for clean-up. When your picture is dry, you might consider using clear acrylic sealer over the picture to make it permanent. This sealer will also bright out the brightness of the colors. It can be purchased at an art or craft store or wal-mart in the craft section and can be used to seal anything---pencil, marker, charcoal, chalk or oil pastels, ink, watercolor, acrylic, or oil paint, even over other varnishes