BEAT cream cheese, butter, granulated sugar and vanilla in large bowl with electric mixer on medium speed until well blended. Add flour; mix well. Cover. Refrigerate several hours or overnight.

PREHEAT oven to 350°F. Roll dough on lightly floured surface to 1/8-inch-thickness. Cut into shapes with 2-inch cookie cutters; sprinkle with colored sugar. Or, leave plain to frost later with decorating icing (after cookies are baked and cooled). Place on ungreased baking sheets.

BAKE 12 to 15 minutes or until edges are lightly browned. Remove to wire racks. Cool completely.