yeah i don't get how that stuff rolls down (up) there. but i guess the 1$ coin here failed, so it's obvious i can't see how it works over there.
well canadians don't have a one dollar bill right? that's why, durp.
We decided that since paper money is easily destroyed, and $1 bills would be damn common, they would be thew ones getting most damaged. So instead of having to constantly make more bills to replace the ones that are damaged, we decided on something that's a lot tougher.
And the $2 coin (the toonie) came in 1996. According to wikipedia: "It costs 16 cents to mint a Toonie, which is estimated to last 20 years. The discontinued two-dollar bill cost six cents to print and, on average, each bill lasted only one year." They are also more convenient than having a ton of loonies when you've got a considerable amount of coinage.
Also, we have different colored bills because it's easier to tell them apart without having to actually read anything. If you see a blue bill, you know it's a 5, if it's purple, 10, green, a 20, red, a 50, and brown, a 100.
Also:
http://en.wikipedia.org/wiki/Canadian_Tire_money