That it would, and it's used in some works. Problem is, it would also leave a shadow.
That was the amazing part. Things just keep going.
You'd also need some good reflexes to change the colour immediately in response to movement, as well as additional skin colours.
"For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled." - Richard Feynman
Spoilers for the new XCOM: Enemy Unknown ahoi!
I believe gene troopers from the XCOM: Enemy Unknown expansion Enemy Within can get such an upgrade (Called Mimetic Skin). It's not that effective as invisibility as anyone who saw where the trooper came from will see him/her afterward, and it only work when they're in full cover (behind a high wall or something like that, a park bench won't do), implying it only somewhat works due the chaos on the battlefield (snipers can use half cover, but then they're used to being stealthy, being snipers and all that...). There is an alien becoming invisible through the usual way, but visible through some biological electromagnetic field or advanced sensors, and Ghost Armor if I remember it right, simply phases the wearer partly in Another Dimension, making them invisible until they attack (because they have to come back to their own dimension or else their attack would still affect the other dimension), which is how a UFO evaded the best Earth-based radar arrays for a long time, and it only gets detected through the use of a device that was captured from them and can interact with the other dimension (studying it gave access to the aforementioned armor)...
Wouldn't an advanced chameleon-like camouflage give you, for all intents and purposes, invisibility while avoiding the typical pitfalls? Of course, it would require other secondary powers (advanced analytical capability being the first I could think of.), but it's a different way of providing the invisibility.
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