The MTT-derived formazan is not water-soluble because it is a neutral organic compound, thus it precipitates after MTT reduction and you need to add an organic solvent like DMSO to dissolve it again. The formazan has a quite different absorption spectrum compared with MTT, that's why the formazan is purple (it absorbs light of 500-600 nm). This effect bases on the different resonance (or mesomerism) of the formazan compared with the MTT salt.