Preheat oven to 325 degrees F. In mixing bowl beat butter with mixer for 30 seconds. Add vanilla. Beat until combined.

In a medium mixing bowl combine flour and sugar. Add flour mixture to butter mixture in thirds, beating on low speed after each addition. Mixture will seem dry and crumbly. Use hands to press mixture until it forms a smooth ball.

Divide dough into thirds. Roll one-third of dough at a time between two sheets of waxed paper to 1/4 inch thick.

Using 3- and 1 1/2-inch ornament-shaped or round cutters, cut dough into large and small shapes. Re-roll scraps. Chill dough, if necessary. Place 1 inch apart on cookie sheet. Bake large ornaments 15 to 18 minutes or until edges start to brown. Bake small ornaments 12 to 14 minutes. Cool on cookie sheet for 2 minutes. Carefully transfer cookies to wire rack. Cool completely.

Using red, kelly green, and lemon yellow decorating icing, decorate cookies with decorating tips, adding dots, stripes, and squiggles. Let cookies stand until icing is set. Makes about 18 large cookies; 22 small cookies.