Manorial court records, wills, and archeological evidence suggest that at least some peasants were wealthy enough to own painted cloths, religious icons, silver spoons, tablecloths, brightly colored clothing, and jewelry. The stereotype of dark and dirty peasant hovels does have some truth to it, if you're talking about the poorest peasants, but not all peasants were poor; most were middling and a few were fairly wealthy.

As for colors of clothing, red and yellow were the cheapest colors to produce while black, scarlet, indigo blue, and purple were the most expensive and were often restricted by sumptuary laws.

Medieval houses often used lots of whitewash, including the interiors, which would have made them look a fair bit better than the usual shit-brown huts, and we're finding new evidence of more extensive use of light colours for interiors, including things like distemper which were naturally yellow, or yellow-ish. This would also help the interiors look better when interior lighting was much more limited.

Clothes could easily be dyed bright colours, but colour fade would have been a much more important factor, and of course they tended to see far more wear and tear. There would be vast differences between the clothes of the different classes, with some colours/shades only being available to the wealthy, but even disregarding that, the workmanship and quality of the clothes (and in some times and styles, the sheer quantity of cloth), not to mention the dyeing itself, would be worlds apart.