Jim Hawthorne, a West Coast radio disk jockey, with popularized the idiom in the late 1940s. Citing a May 10, 1948 Time magazine article, Hawthorne is quoted as saying his broadcasts were carried over five Southern California stations on what he called “the net-to-net coastwork of the Oh-So-Peachy-Keen Broadcasting Company.” He also was the author of that popular phrase, "I mean, can you dig it, daddy-o? Neat-o!"
The idiom's origin is unknown but it was always used to signify that something, someone, some situation, or event were superlative in the coolest, funniest way. But with continued use it has eventually become a phrase that carries with it a hint of sarcasm, irony, or condescension. (source)
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