Preheat the oven to 350 degrees F (175 degrees C). Grease 8 muffin cups or line with paper liners.
Combine 6 1/2 tablespoons butter, sugar, and vanilla sugar in a bowl; beat with an electric mixer until light and fluffy. Add eggs one at a time, beating well after each addition. Add 1 teaspoon vanilla extract and beat until smooth.
Mix flour, baking powder, and salt in a separate bowl and add to the batter. Beat for another 5 minutes. Spoon batter into the prepared muffin cups, filling each 3/4 full.
Bake in the preheated oven until tops spring back when lightly pressed, about 14 minutes. Cool in the tin for 5 minutes. Transfer to a wire rack and let cool, about 20 minutes. Cupcakes sink slightly after baking, which is fine as it creates a flat surface for the flowers.
Combine 1/4 cup butter and cream cheese in a bowl and beat with an electric mixer until well combined. Add confectioner's sugar, 1/4 cup at a time. Beat in 1/2 teaspoon vanilla extract after half the confectioners' sugar is incorporated. Set aside.
Pour colored sugar into different small bowls. Cut each large marshmallow into 5 slices. Dip marshmallow pieces with the cut side down into one of the colors so the sugar will stick to the marshmallow. Repeat with the other marshmallows and different colors.
Spread a layer of frosting over each cupcake. Arrange 5 marshmallow slices on each cupcake in the shape of flower petals. Place a candy-colored chocolate piece in the middle.