I've never heard it as a negative or a positive, just a descriptive. I never understood that the speaker meant that the squeamish person should be different, or was too uptight, just that the person being discussed felt nauseous at the sight of blood or injury. Also, I've never heard it about used about cooking, just about nausea at medical things and blood.
I'm from New York, and I've lived in California for many years. Is my understanding wrong? Or is there a more limited and less pejorative meaning in the regions where I have lived? Thanks.