The use of colored belts is pretty much an American invention to allow for some visual encouragement of progress. I have seen as many as 10 different colored belts being used. Of course, the other side of this is that they get to charge the student money every time they test for a new belt-rank. (another American invention)
I spent a summer training in a Shotokan Karate dojo in Sapporo and they had just two belts, white and black. That is the traditional system in most Japanese martial arts. I don't know if "traditional" judo uses colored belts or not (it is, afterall, a sport).
In my aikido dojo, we use:
brown: san-kyu and ni-kyu
brown with black stripe: i-kyu
black: shodan and above
The bottom line is the color of belt is not always a good indicator of how good a martial artist really is. I've seen black belts that were of shaky compitence and lower belts that were quite outstanding.