[Kalimac]

"Saruman of Many Colours" isn't necessarily that different from "All Colours." I doubt that at that point he was thinking "You know, I'd really like all colours, but darn it, Radagast has a lock on brown. Oh well." The point is that since Saruman is taking what he's not entitled to (all those colours) there's no reason that he should suddenly hold back from co-opting Gandalf's and Radagast's as well. I would guess that he, and was called Saruman of Many Colours because (1) no matter the exact number of colours, he still has a lot more than anyone else, and thus by his logic is superior to them, and (2) like Arwen said, it sounds better! Tolkien had undoubtedly heard of Joseph's coat of many colours, so the phrase was probably in his head like that already, so he just wrote it down as "many" instead of "all." Not saying he was consciously ripping off the Bible, just that it is a pre-formed phrase in most of our minds, and that given the choice between "Coat of all colours" and "Coat of many colours" most of us would choose the latter just because it feels more familiar, regardless of how many exact colours the coat has in it.