I don't know if this is a feature brought by the Android 2.2 update, but, without any root, the trackball from the Nexus One can actually flash in different colors. You can have any color you like: Green, Red, Blue, Yellow, Orange, Cyan, White, Magenta, Purple, and if you now the hex codes of the colors, almost any other color (or a combination between them). I'm not sure, but what I think is that there is only a single LED, capable of flashing in different colors, and not more LEDs, every flashing in its own color. But this doesn't matter.
What's important is that this feature is working well on Android 2.2, FRF91 Build, without root. I'm now asking myself were the hell are the developers, and why they didn't develop yet their applications with this feature. They can make the trackball to flash blue when you receive a reply or a DM on Twitter, and yellow when you get a message on eBuddy, for example.
Search for "LED Tester" into the Android Market (it's the second result, that one with the blue trackball at its icon).
if it doesn't work work for you, please leave a comment telling the version of Android, its build, and if your device is rooted or not.