I have never baked and decorated cookies. After looking at all the lovely cookies on the site, I just had to try. Well, I purchased pre-made sugar cookie dough...mistake???? I bought a tulip and a butterfly cutter. When my cookies came out of the oven they were "unrecognizable." 
They looked like cookie blobs (for lack of a better description). 
Was my first mistake buying cookie dough?
Also, what is the best icing to decorate the cookies?[/img]
Yep - I don't think the store-bought dough does a very good job of holding its shape. Try the No Fail Sugar Cookie recipe on this site - that one doesn't spread too much.
For decorating, it just depends on what you want to do. I like using fondant, others like using royal. It's up to you. There's a good article on this site by Antonia that's called "How to Bake and Decorate Cookies" - check that out.
You are not an idiot... you just made an innocent mistake that you can now learn from. 
I found out the same thing recently. I was going to make dinosaur shaped cookies for a little boy and did the same thing you did... used PB sugar cookie dough. Mistake. The perfect lil' unbaked dinosaurs turned out to be some sort of rounded elephant looking baked cookies. Not at all what I had in mind. I can't help you with the icing as I've not tried to do that, yet. Just wanted to let you know that you're not the only one who has made the same mistake. 
Here's a super (multi-linked) thread on cookie bouquets:
(tutorial, recipes for cookies, frosting, glazes, comparisons, stacking, etc.
http://forum.cakecentral.com/cake-decorating-ftopicp-1471741-.html
HTH
HTH
Several years ago, before I found several reacipes I really like (1st Martha's recipe, then fell inlove with NFSC - I haven't tried Penney's yet) I used to use the cookie dough from a package (mix, not premade) and add 1/2 cup (or more) of exttra flour. They did spread a little, but they weren't too bad.
I think if you really wanted to use the premade stuff, you should add more flour to it. The no fail sugar cookie recipe is awsome, just refrigerate your cut outs before you bake to keep down spreading.
Antonia74 has a royal icing recipe on this site that most people love and poured cookie glaze is good too.
I forgot to tell you that I too am a cookie baking idiot. lol Just take a look in my photos. You will see a picture taken only a few days ago of WHAT NOT TO DO. At least we get to eat our little idiots. It's them, not us. lol 
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