This is a weird idiom. I'm sure it must have been very popular in 1920s, but it doesn't make much sense today.
I actually get "cat's pajamas" because pajamas in the 1920s was a very new and out of the ordinary thing. But what's so new and great about cat's whiskers? They've always had them!
If someone can enlighten me about the origin and popularity of this idiom, that would be great.