Python is a great language for iterating over collections - lists, tuples, dicts, sets, etc. - and all those elifs don't look very Pythonic to me. Let's clean it up a little:
colors = ('grey', 'red', 'green', 'yellow', 'blue', 'magenta', 'cyan')
for char in string:
print termcolor.colored(char, colors[string.index(char)%7])