I've never heard "gas" used this way, but apparently it's slang. According to the Oxford Dictionary, gas can be slang for "an entertaining or amusing person or situation e.g. the party would be a gas." The same definition is also in the Merriam-Webster Dictionary (American English) and the Macquarie Dictionary (Australian English), so it appears to be pretty widespread. The Oxford Dictionary also lists a noun form, which is apparently used in Ireland: "enjoyment, amusement, or fun e.g. it was great gas in the club last night". Both these definitions are missing in the Cambridge Dictionary. I looked up "a gas slang" and found it on a list of slang from the 60s: http://www.cougartown.com/slang.html "In the early 60's, as today, the young people had a different lingo and it, as today, drove our parents nuts... Also these words are words used in and around Hawthorne [California], where I grew up." So it was used this way in the 60s (when it was apparently pretty widespread), and may still be used that way in California. I've never seen Friends, but according to Google the actor who plays Pheobe comes from California. A sample size of two isn't much, but it's looking like "gas" still is used that way in California. As for why it means this, several possibilities are speculatively given here: http://linguaphiles.livejournal.com/4001738.html

I wouldn't analyse it too much. You're correct in thinking it means "a lot of fun".