The cat's ass

My co-workers and I were pondering why someone would use the phrase "that's the cat's ass" in response for something good. Last time I checked a cat's a** wasn't a very pleasant thing. So why do we use it that way and where does this saying come from?
Can anyone help?

Or the dog's bollocks? I like the inventive alternative, 'the mutt's nuts', athough why either is used to signify quality is beyond me.