From what I remember, if you take the same color each time you get an ultimate form for the final level. Also, if you don't take any color for every level, you get a different ultimate form for the final level. cool stuff.
Yep. From what I read online, you have to pick one of each color to get the ultimate "silver" form for the final stage, and the good ending. Some people stated that the three colors had to be picked in a certain order (O, G, B).
Also, if you pick the same color each time, you eventually get a powered-up version of that form (I never did this).
Playing through without transformations would definitely add a challenge, but I didn't think you could skip them.