Technically the word 微妙 means
as per WWWJDIC:
(adj-na,n) (1) delicate; subtle; sensitive; (2) difficult; delicate (situation); complicated; (3) doubtful; questionable; dicey;
However, last time I stayed in Tokyo ( about a year ago) most of my Japanese friends (about 25-30 years old) were using 微妙 to mean "kinda sucky" or "boring in an annoying way". I believe I remember a sentence like this:
海はどうだった? まあちょっと微妙。
How was the beach? Eh... it kinda sucked.
I also heard it used as an adverb with this meaning but I can't remember an example. When I asked my friends about it, they said they don't really use that word for positive things, though none of the numerous examples I saw on ALC had this slangy type of meaning. I guess the meaning of subtle mixed with dicey and then became "so either-or that it just sucks"? If anyone can explain the subtleties of this slang usage, I've been wondering for a while.
微妙may have a slight positive nuance comparable to the Englishsubtle. The negative nuance may arise due to the word being used as a euphemism so that you don't have to explicitly mention the negativeness, but it surely is not the primary meaning. I think Dave's answer describes this situation quite well. To mention the subtlety in things that are definitely positive as in art or meal that you mention,絶妙will be an exact fit. – sawa Oct 2 '11 at 5:34