I did think about sharpies, but when I tested them out the tip was too big for me to get some smaller details clearly drawn.
BTW except for Toph's earmuff-things I used brush tipped fabric markers. You can blend the colors a bit (like on Little Foot on the Land before Time one) just let the 1st color dry in before adding the next or it'll get too wet and bleed. Run an iron (no steam) over it to speed up the process. For the earmuff-y things I used a white fabric paint pen.