There are six ways that organisms can turn into fossils, including:
unaltered preservation (like insects or plant parts trapped in amber, a hardened form of tree sap)
permineralization=petrification (in which rock-like minerals seep in slowly and replace the original organic tissues with silica, calcite or pyrite, forming a rock-like fossil - can preserve hard and soft parts - most bone and wood fossils are permineralized)
replacement (An organism's hard parts dissolve and are replaced by other minerals, like calcite, silica, pyrite, or iron)
carbonization=coalification (in which only the carbon remains in the specimen - other elements, like hydrogen, oxygen, and nitrogen are removed)
recrystalization (hard parts either revert to more stable minerals or small crystals turn into larger crystals)
authigenic preservation (molds and casts of organisms that have been destroyed or dissolved).
Most animals did not fossilize; they simply decayed and were lost from the fossil record. Paleontologists estimate that only a small percentage of the dinosaur genera that ever lived have been or will be found as fossils.
Why are Fossils Rock-Colored?
Because they ARE rocks! A fossilized object is just a rocky model of an ancient object. A fossil is composed of different materials than the original object was. During the fossilization process, the original atoms are replaced by new minerals, so a fossils doesn't have the same color (or chemical composition) as the original object. Fossils come in many colors and are made of many different types of minerals, depending on what the surrounding rock matrix was composed of; one dinosaur bone (Minmi) is an opal.
Also, some fossils of skin (and other soft body parts) have been found. Again, the color of the skin is not retained during the fossilization process, all that remains today is a rocky model of the original.