I didnt do it for a cake but I have done it for cupcakes. The colors could be seen and though it was time consuming I was impressed how well the colors stayed and didnt blend at all. The only thing was I didnt have even lines of color as you see in the rainbow cakes where the cakes are done individually.
I made one, it was a lot of work splitting it up into 6 bowls. I used yellow cake mix so the colors were a little muddy. I used 3 color per layer and it came out nice, just adding mix of a different color over each one.
Next time I am going to do it in a bundt pan. I saw a video online and you use the least amount of batter for the bottom layer (color) and most for the top one.
I tired to upload a picture but it didn't work so I had to use tinypic.
It's supposed to be purple, blue, green, yellow, orange, red. But not too bad for my first time if I do say so myself. 
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I know this method is a little different than what you are asking for, but I made one for my daughter's birthday last summer baked in individual layers. Divide the batter equally into bowls, add food coloring, and bake in thin 1" layers. Here is a good link for a tutorial, if you need one:
http://onecharmingparty.com/2010/09/14/art-gallery-party-rainbow-cake/
Sweetapolita also made a darling one where her daughter's "doodled" on the white fondant with edible markers. I've always wanted to try this (image is from her website).
http://sweetapolita.com/2011/04/rainbow-doodle-birthday-cake/
I recently made a 6 layer rainbow cake have a look at my Minnie Mouse cake below.
I used in total 1.5 cake quantity but made in thirds (.5) so I could cook two layers at a time, this way the cake mixture didn't sit around, plus I only had two tins to use.
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