When we inlay sidelines on a fretless fingerboard, we only nick the edge and do not extend the fretline all the way across. You can see the finished result on
Barry's Featured Custom, and also on
Kent's.
Before the days where I took 300 pictures a week, we made an Orion 5-string fretless in Vermilion with Vermilion fretlines, for just the reason sfnic stated. Of course, once the board is resurfaced, those orangey-red lines will be bright and shining.
We've done both Koa and Walnut fretlines as well (again, not pics, sorry!). I personally found that since these woods have variations in color, it looks a little funny, almost like we didn't inlay a strip of consistant width.
Unlined is best - as lines are really only guides. If you can force yourself to take the pluge, don't get lines, rely on your ears/brain. But if you want to guides, the sidelines are second best - they leave the surface free from different materials for wonderful gliss. Over time as the wood shrinks at a different rate than the glues that hold the fretlines in, you won't hear any even slight ratcheting as you slide.
Many players are attracted to fretless for the precise reason that they want to play the notes between the frets, and the pull those fractional intervals that never seem to intonate.
When I grow up, I want to be a fretless 5-string player. But I think that's a long long way away!