So far in Dead Island I've noticed white, green, blue, and purple items. These seem to indicate different rarities, similar to the classification system used in Borderlands, but I don't know what these colors actually mean. Is green more rare than blue? What are the different rarity colors?
So far, here are all the colors I've found ordered in quality (based on overall stats when compared to one of lesser color and also how often I see weapons of that color):
The in game text during loading says that some of the quest rewards gives you unique weapons, and (assuming Gabriel's Sledgehammer is a unique), it is still an orange colored weapon. So I'm going to assume that even unique weapons are orange. I've also found a Master Chef, which was also orange.
This link seems to back up my answer.
Orange are the super rare or legendary weapons. Purple are rare, blue and green are rare but tend to be less rare than others.
There are a total of FIVE different levels of rarity for an item in Dead Island. These are:
White (Common) - Absolutely everywhere, most items and weapons are this color.
Green (Uncommon) - Frequently found in chests and given as a reward from quests. Uncommon items are occasionaly [sic] dropped by zombies on death.
Blue (Rare) - Often given as a reward from quests but can be found on zombies after death and in chests although the chance is low.
Violet (Unique) - Occasionaly [sic] given as a reward from quests but can be found on zombies after death and in chests but the chance of this is very low.
Orange (Legendary) - Rarely given as a rewards from quests and is both rarely dropped by zombies on death and found in chests. Finding one of these is truely [sic] a gem, congratulations if you have one.