He was a general in the Civil War. Legend has it that he didn't like how some generals didn't care too much if their army didn't have shoes or good food, or any other essentials. He decided to take extra care of his men, and even went as far as to hiring prostitutes to stay with them. I guess other generals saw this as him showing off, and poked fun at them. They called them "Hooker's Army" and The name stuck ever since.
My family is 100% sure this factual and even takes offense when prostitutes are referred to as hookers. I'm skeptical because That seems like such a widely used term that likely didn't come from that single source. Is this just a family legend that got stretched and exaggerated?
General Joe Hooker was a West Point graduate, fought the Indians and in Mexico, and rose to command the Union Army of the Potomac after there bloody defeat in the winter of 1862-1863 at Fredricksburg.
He did do much to improve the administration and morale of the army. Everything from new badges to identify each Corps, to more furloughs for the men. However he had a personal reputation for drinking and cronyism, and could hold a grudge with the best and earned the nickname "Fighting" Joe Hooker.
His tenure in command was topped by the battle of Chancellorsville, where by aggressive marching he got around the flank of Lee's Army of Northern Virginia, but then the army settled into defensive stances. This allowed Lee to send Stonewall Jackson on a bold march of his own to slam into the flank of the AoP and cause a great deal of losses and confusion. Hooker then further pulled his men back and eventually retreated and pulled back to rear defensive positions.
A few weeks later after Lee had launched his army north toward Pennsylvania Hooker was relieved and replaced by George Meade, who a week later would command the Union victory at Gettysburg.
Hooker would go on to provide solid service as a Corps commander out West under Grant and Sherman.
But he is not generally regarded as the origin of the term Hooker, in fact it appears even in the 1840's. His reputation for drinking, fighting, and womanizing however did not help his legacy in that regard.
The Army of the Potomac: Glory Road by Bruce Catton is an older but still superb history of the Army of the Potomac during the period including Hooker's command.
Also for an introduction here is the wiki page on him: http://en.wikipedia.org/wiki/Joseph_Hooker