To answer the question, I do think using only colored holds tends to compromise Setter's creativity, and lead to stale, or repetitive routes IF you don't have a massive hold selection. Having seen the Setter's room at Louie Anderson's gym in Socal and at the new Momentum Mill Creek, I don't think I'd have a problem there, but at most other gyms, an "adequate" hold selection just isn't good enough.

At our gym, we use tape. I have experimented with setting a wall or two by hold color, and the response is usually about 75% positive, 15% negative, and 10% furiously angry. With those numbers, it's just not worth switching. I should add, we are a 95% bouldering gym, with a small top rope wall used almost exclusively by kid's groups. We set that wall by hold color because those routes stay up a long time, and the only wear they really show is chuffered tape if you tape. Most of the kids don't even use chalk, so the routes still look fine six months later un-taped. We do set our finals walls for comps with only hold color, and only holds from our primary sponsor, but that's only every six months.

My everyday policy is to encourage our setters to set by hold color unless and until it impedes their creativity in any way. At that point, grab whatever you want. Sometimes though, there aren't enough jugs for an easy problem, and we'll just grab random colors. That's fine too. Basically, I just want the walls to look as good as possible without ever impeding creativity. We end up with about 60% or more of our problems having the same color holds, the rest are mixed.

I love the look of a freshly set un-taped wall, but have been frustrated when visiting gyms that are tapeless and the problems have been up for a while. It can be really easy to mix up red and orange, etc... or not see a small foot because it's black from shoe rubber and you're doing a pink problem. Overall, I think my preferred method of route marking for roped routes is un-taped, and boulders taped and matched to hold color when possible, but with route quality and creativity being the most important thing. Aesthetics are second.