I have a micro shredder that i use to shred all my junk mail and cardboard boxes. I use it as mulch, not in my compost pile. I used to take all this stuff to the recycle station.
I found that micro shredded paper does not get blown by the wind (at all), so it works great as a mulch. And, the brown from cardboard boxes is much better to look at in the garden. The white kind of makes it look like snow...
Most of the colored paper bad articles I have read are opinions. Colored paper is recycle-able. Paper napkins and kleenix are not. I use anything that can be recycled in my mulch. Also, i think napkins/tissue are not easy to shred:)