Not for a side-by-side diff, but I just use this for color diffs:

    cdiff() {
      diff -u "$@" \
        | sed 's/^\(@@ .* @@\)$/'$'\e[36m''\1'$'\e[m''/g' \
        | sed 's/^\(-.*\)$/'$'\e[31m''\1'$'\e[m''/g' \
        | sed 's/^\(+.*\)$/'$'\e[32m''\1'$'\e[m''/g' \
        | less -c -R
    }