And the origin is a mock-Italian American pronunciation of "Business". Just imagine a New York gangster says "it's da beez kneez" and you should get the connection.
Since other phrases meaning 'excellent/ideal' such as the cat�s miaow, the gnat�s elbows, the monkey�s eyebrows and the cat�s whiskers meant exactly the same thing back in 1920s/30s USA, I'm not too sure about Jenstar's explanation...though I do like it!