The Grimstad Bull - Thor Hushovd
So where did this scheme originate?
First, some facts:
-A world champion must wear the jersey when competing in the same discipline, category and speciality for which the title was won. For example, the world road race champion would wear the garment while competing in stage races and one-day races, but would not be entitled to wear it during time trials. Similarly, on the track, the world individual pursuit champion would only wear the jersey when competing in other individual pursuit events.
-Failure to wear the rainbow jersey where required carries a penalty of 2500 to 5000 Swiss francs
-After the end of a rider's championship year, they are eligible to wear piping in the same rainbow pattern on the collar and cuffs of their jersey. They retain this right for the remainder of their career.
The coloration and order of the stripes are modeled after the coloring and order of the rings on the Olympic flag.
So where did that coloring come from?
The widely-recognized "5-rings" was designed in 1912 by the founder of the modern Olympics, Baron de Coubertin. The rings were adapted from a flag for a union of two French sporting organizations at the time that had two interlacing rings to represent a marriage of the two groups.
The colors were chosen because they were the colors represented on the national flags of the world [at the time].
Information from "Olympic Revue" magazine and the UCI Regulations manual