You could keep 2 teams, But you could make one for each color. For example: the Server (Only the server is alowed to do this,) goes to the network settings, and goes to the CTF settings. Then he finds change team colors. He clicks on it. There are two options. They say:
Change team 1 color = Sonic;Blue
Change team 2 color = Knux;Red
If you click on them, they will have alterntives like: Tails;Orange, Zim;Green-(does NOT have to be in there...), Super Sonic;Yellow, Eggman;Grey, and many others. Also there could be(All of this could be in SRB2 1.1) a modification for characters so that they could make there own flag, and also in the MAINCFG, there could be a:
This would set the ring color, and your color!
EDIT: Also, in the network settings, in CTF settings, there would be a change of number.