Yes, they would lose all the neon color when they go to sleep. After the light goes off, they also turn off their neon sign. And when the Sun goes up(light in the case of captibity), they turn the neon sign back on again. I imagine, it must be the way of survival. Since while they are in the resting/sleeping at night, they don't want to be noticeable especially to the potential predators. However, when they are awake, they would like to advertise their presense especially toward the other sex. That is why when they are in mating condition, most of the male fish color get brighter, some female of some spicie would also.
Sometime, they don't color up as bright when there are no competition or luck of the other sex as well as when the fish get old and past their prime. I guess it just the survival of nature that fittest, most vigourus, strong fish would be the first one to mate to ensure the survival of the specie.
And of course, some nutrition or luck of it may affect the color. However, most of the main brand fish flakes should be well balanced. But variation of food is good. And some live food is good but some you may need to watch the diseace.
Anyway, the Neons are omnivous. They can eat pretty much anything from meat to vegetables.
I feed mine as well as several flakes and palets, occasional live culture of microworms, daphnia and BBS. They also get some scrap of meat but not seasoned like finly chopped up beef, chicken, shrimp. Also they really like the boiled or steamed green pea but no skin. You can pop frozen pea in the microwave for a minute or so and squeesh the skin off and mush it with your fingers and toss in the tank. All my fish go after them, Neon, Glowlight, Diamonds, and Corys. I read some expert of Tetras feed butter squash and it improve the color of the fish. I even feed them crumb from my toast.
So anyway, you can feed almost anything but remember to not feed to much. That would foul water. Also I woould avoid too oily food for same reason. I believe they enjoy the variation of food.