Preheat oven to 400 degrees F. In a large bowl, beat butter until creamy. Add gelatin and sugar and beat until well mixed. Beat in egg and vanilla. Gradually add flour and baking powder. Mix well. Shape dough into 1-inch balls and place on baking sheets.
Flatten with bottom of glass, and make an indentation in center of each cookie with your thumb. Place a cherry in indentation and sprinkle with sugar crystals. Bake 8 to 10 minutes,or until edges are lightly browned. Cool 5 minutes,then remove to a wire rack to cool completely.