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Melt butterscotch chips in 1-quart saucepan over low heat 3-5 minutes, stirring constantly, until smooth. Pour into large bowl; add all remaining ingredients except decorator sugars and frosting. Beat at low speed, scraping bowl often, until well mixed.
Divide dough in half. Wrap each half in plastic food wrap; flatten slightly. Refrigerate at least 1 hour until firm.
Heat oven to 375°F.
Roll out dough on lightly floured surface, one-half at a time (keeping remaining dough refrigerated), to ⅛-inch thickness. Cut with 2 ½-inch cookie cutters. Place 1 inch apart onto ungreased cookie sheets. Sprinkle with decorator sugars, if desired.
Bake 5-8 minutes or until edges are lightly browned. Cool completely; decorate with frosting, if desired.