On the Wilton website (y'know; the "Wilton Method" for cake decorating), you can do a search on their discussion board for "hair" or "fur" to find techniques for reproducing the effect with icing. Start here: http://www.wilton.com/default.htm

I'm not sure if anyone distributes coconut shavings in a fine enough texture to use as "fur" (for rolling icing-balls in the coconut shavings).