"Chutzpah" was a famous Jewish word even before Professor Alan Dershowitz wrote a book with that title a couple of years ago.
Dershowitz made an argument for being the sort of assertive, confident, in-your-face Jew he believes one can and should be in the United States today. The book, and its insouciantly Jewish title, tell all you need to know about the differences between American and British Jews.
Historically, "chutzpah" (usually translated as "boldness," "barefacedness" or "impudence") has been a necessary Jewish trait. It has helped us to succeed as immigrants and outsiders.
The word is at least mishnaic (1,900 years old) in origin. Its root is the Hebrew "chatzaf," which means "peel off," or "bare." Its talmudic connotations are not wholly positive. A court which attempts to function with only two judges, instead of the usual three, is called a "Beth Din chatzuf," an arrogant court (Sanhedrin 2b).
The Talmud says that the generation preceding the coming of the Messiah will be one in which "chutzpah prevails" (Sotah 49b). Since it also says of that generation that truth will be absent, and God-fearing people will be ridiculed, we can see that chutzpah here is not entirely a compliment.
However, some of the chasidic rebbes saw "chutzpah" as an important spiritual quality. Rebbe Nachman of Bratslav writes that when we think of our flaws and imperfections, which keep us far from God, we can feel like giving up on trying to come close to Him.
At these moments "chutzpah" is necessary, in order to pray and to continue to strive to approach God, despite everything.