Since its inception, this phrase is now used as a suggestion to somebody whose woman is being irritating or overbearing. It is important to note that when used as a suggestion, this phrase doesn't always mean that somebody should chill their woman out with lavish jewelry, but rather that they should chill her out by any means necessary. This phrase is often used when somebody is extremely fed up with a friend's significant other, and is a way to say that the situation must be taken care of post-haste.
Angus: "Sure dude, its been a while since we hung out."
Bob's Girlfriend: "You promised you would take me to Bed Bath and Beyond and then to go see a play and then to do some other immasculating activities."
Bob: "Oh I forgot, sorry hunny."
Angus: "THATS IT, Bob. You need to chill that bitch out with ice before I beat your monkey ass."