yes. birds see in color. they identify one another by slight variations.
i have read that birds can see ultraviolet colors also. that is why there are the greens and violet shades in the feathers.
...And why would the males have such bright plumage if the females couldn't see it?
Birds also need to see color to help distinguish between different foods. In fact in the wild, certain insects are avoided because birds learn to recognize that that color means poison. Are you familiar with the bright orange monarch butterfly, poisonous to some birds? It is thought that the viceroy butterfly, also bright orange, evolved to look like the monarch, so birds would avoid eating it, too.