I'm thinking it's a demo thing. It causes players NOT to get extra lives to keep demo lines moving. Imagine at E3 if a dude is playing and continues to die, earn 100 rings, get another life, die, earn 100 rings, get another life, etc. He'd be playing Colors all day! I'm sure we'll be able to collect as many rings as we want in the final version.
Unless they truly have a reason for a 99 limit, but I doubt it.