this one was covered by the Word Maven crew at Random House a couple of years ago, and I quote:

Books on proverbs and sayings all agree that Butter wouldn't melt in her (or his) mouth is not used to describe nice people. So residents of Seattle ought to be annoyed that it was used in an essay about them. The phrase is first recorded in 1530 in John Palsgrave's Lesclarcissement, one of the earliest French grammars written for English speakers, and therefore a good record of the English and French language of that period: "He maketh as thoughe butter wolde nat melte in his mouthe." By 1546 the saying was common enough to be recorded in John Heywood's book of proverbs: "She looketh as butter wouldn't melt in her mouth."

The saying refers to someone who is demure and proper, and therefore "cold" enough to keep butter from melting. But it's used in a contemptuous way to imply that the person is overly demure and proper, and has an insincere desire to please. So the sense nearest the mark is '(one who is) superficially nice but is treacherous deep down'. [EA] The underlying insincerity is shown in this excerpt from Jonathan Swift's Polite Conversation (1738): "She looks as if butter wouldn't melt in her mouth but I warrant, cheese won't choak her." The derogatory connotation is also evident in this excerpt from William Makepeace Thackeray's Pendennis (1850): "She smiles and languishes, you'd think that butter would not melt in her mouth."

And this quote from Margaret Mitchell's Gone With the Wind should finally settle the matter among your friends: "'I said some terrible things to him that night when he deserted us on the road, but I can make him forget them', she thought contemptuously, still sure of her power to charm. 'Butter won't melt in my mouth when I'm around him. I'll make him think I always loved him and was just upset and frightened that night'".


so while it may have started out as simply meaning 'cold', it has shifted in meaning somewhat.