In the flowering chaos of the 1960s, it was a rallying cry; now it's mostly editorial grist for conservatives infurated with hedonism and the bitter fruit they think it's sown.
But I like the phrase. Like the proverbial mad genius, it is misunderstood.
The sixties were close to the fifties: this is sometimes forgotten. 1967 is the same distance from 1959 as 2004 is from 1996, and the fifties lived on (as the nineties do today) everywhere; haircuts, television shows, university provosts.
If it feels good, do it was a reaction. When everything seemed suddenly possible, when the old (but present) dictates of society were revealed as shallow or nonsensical or cruel, it was a guiding principal for chosing among those possibilities.
And it's a good principle. Good in the literal sense, if not necessarily correct: built on the idea that good things feel good, because people are good; a marker tied to the compass arrow of human compassion and will.