A paper bag is the opposite of "Lollipop". It is used to describe a girl or guy who has a hot body but an ugly/plain face. It's called paper bag because you metaphorically want to just a paper bag on the person's face.
Guy#1: Woah, this babe in front of us has an awesome figure!
Guy#2: Wish she'd turn around so we can see her face.
*girl turns around and her face turns out to be ugly*
Guy#1: Daaaaamn!
Guy#2: What a paper bag!
12 step recovery jargon referring to someone new who talks about how great life is, now that they'resober. Usually meaning that the person is out of touch with reality.
The new guy seems pretty happy for a dude who has no job, no money and no family. He must be on a pink cloud.