The trivia that this word comes along with is more fascinating than its etymology which is quite simple, really. Etymologically Utopia = no place as it comes from the Greek "ou" that means "not" and "topos" that means "place". It was the title of a 1516 Latin book by an English scholar and eventual saint, Sir Thoma More wherein he described an ideal state where all is ordered for the best for humanity as a whole and where the evils of society, such as poverty and misery, have been eliminated. He called this ideal imaginary island "Utopia" - nowhere, as it seemed unattainable.
The title carries a pun that may be a consequence of mis-translations or propagated by More himself where "u" in Utopia is mistaken as "eu" that means good in Greek.
Dystopia is the anti-utopia.
Trivia 1 :More is listed in Red Square as one of the heroes of the Russian Revolution because his Utopia was supposedly a primitive communist state of justice and perfect social conditions. This while Utopia was an imaginary place and Thomas More a lawyer himself was a capitalist.
Trivia 2: More opposed King Henry VIII's divorce from Catherine of Aragon, which ultimately led to the separation of the Church of England from the Roman Catholic Church. This cost him his head, but gained him sainthood as a Catholic martyr.
Sources: http://www.answers.com, http://www.hellskitchen.com/