What happens to air when it gets hotter or colder? The balloon is showing you the answer. Picture being really hot with a bunch of other people and waving your hands to fan yourself off. Then, picture being really cold with the bunch of other people and crowding together to get warm. That is a bit like the air molecules in the balloon, except of course the air molecules don't have hands! And the air molecules don't care if they're cold; they just move slower and don't bump into each other as much and don't push the other molecules as far away from them as they do when they're hot and fast.

Have you ever searched for something you want to know at www.google.com? I searched for 'balloon cold' and found a site called 'MadSci Network' with just your question on it, here:
balloon and air