I thought Karen's suggestion that "apple" suggested a tasty treat made alot of sense. But I looked up apple in the Random House Historical Dictionary of American Slang, and the very first slang definition it gave for apple was... a horse turd! As in, 'Some horse dung being washed by the current from a neighbouring dunghill, espied a number of fair apples swimming up the stream, when, wishing to be thought of consequence, the horse dung would every moment be bawling out, "Lack-a-day, how we apples swim!' (from G. Ashton, Eng. Satire on Napoleon, about 1800)


(ok, the dictionary gave more than 10 other usages, so I wouldn't necessarily read too much into that.)

Regarding our meaning, the dictionary said rather less than the links Wolfgang gave above. I did like this quote: 'The average Lane today is from the Apple, or at least from some Apple, whether it's the Big Apple, the Windy Apple, the Tropic Apple, or the Bunker Hill Apple.' (from Burley, Harlem Jive, 1944).