Yes, colors fade, but so do people. The whole problem with permanent pigments is that many of the best ones are unsafe for use in humans. That leaves the tattoo industry and the tattooists to find safe alternatives. For the most part, we are using very permanent, or lightfast, colors.  In the past, this was not always the case. Especially when it came to Yellow, Orange, and Purple.  Magenta is not very fade resistant still.

The most common denominator in color fade in skin, or otherwise, is Ultraviolet light, especially from the sun.

This does not mean you have to stay a paleface. The sun, especially excessive amounts will fade your tattoos (with the exception of black) at about the same rate it will cause the skin itself to degrade. I know many people will not agree with me, but I stay well-tanned. The tattoos I have that were applied by the most experienced individuals have suffered no more than the rest of my skin, while the ones I have that were applied by less experienced artists have faded a bit more.

Often I hear from potential clients "this tattoo is old, like 5 years old, it needs recoloring" I read this as either the artists did not apply the pigment correctly, or that the client exposed himself to too much sun or got it dirty or wet while healing.

I do reccomend staying out of the sun for the first few months after getting a tattoo. The colors can be aggravated by sunlight (photochemical reaction) before they are properly healed.

I am not saying the sun will not fade a tattoo. You are especially susceptible if you have fair skin, or if you have color pieces without a lot of black to back them up. When black tattoos turn green, that is your skin aging, taking the tattoo along with it. Take care of your skin, and you take care of your tattoos.