gel is much more concentrated. I personally prefer it. And as mentioned above, due to it's intensity, you only need very little gel for smaller quantities of icing. By tiny, i mean you can take some out with a tooth pick. Go slowly. You can always ag=dd more.
Louisa, I have used paste food coloring, and it does work, but I didn't have quite as much control. Try experimenting with an egg yolk (divide it in half): dilute with water, stir it up and then use a really tiny amount of your gel coloring. You will be surprised how little it takes. Let me know how it goes!
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I have a collection of vintage cookie cutters, so am really looking forward to making them this week.