Where did the phrase for being drunk “three sheets to the wind” originate?
It’s almost certainly a sailing term, referring to raising three large sails and subsequently zooming along at full speed without a care in the world.
A “sheet” is a rope that controls a sail. For example on a sloop, the main sheet controls the main sail and a jib sheet controls the jib sail.
[sub]I used to sail every weekend at the San Diego Navy Sailing Club when I was a kid. 
[/sub]
The way it was explained to me, it was derived from windmills.
The windmill had a four bladed ‘propeller’ whose wooden-ribbed blades were covered with sheets to harnass the wind energy.
For normal wind, all four blades were sheet clad. In high winds, four sheets would spin the prop way to fast (no multispeed transmission) so they would remove two sheets, effectively making a two- bladed prop.
THREE sheets would be unbalanced and unaerodynamic, leading an uneven, lurching prop shaft rotation.
This was likened to the clumsy gait of a drunk, thus:
“he’s got three sheets to the wind”.
Here are a couple of other references:
From The Phrase Finder:
And here’s what the U.S. Navy has to say about it:
FWIW I found more hits on “three sheets to the wind” and “sail”, and “three sheets to the wind” and “ship” than I did with “three sheets to the wind” and “windmill”.
almost certainly it refers to what Johnny LA said–the ropes that hold the sails. The phrase was probably frist used by Richard Henry Dana 1840.
The windmill story originated in the 20th century from a professor who visited Nantucket, and had a fanciful story told to him by the guide at the windmill.
Just an update as to when “three sheets in or to the wind” first originated.
Michael Quinion mentions it in a new column at http://www.worldwidewords.org/qa/qa-thr1.htm
He gets it back as far as 1821in print. But adds that it surely goes back farther.
one more vote for the sails theory (used to sail, too)
Johnny L.A. got it right.
{nitpick}
On board ship there is no such thing as rope.
It’s called line.
{/nitpick}
good catch, Corbin. Etymologically speaking, the word “line” to mean a rope on a ship came before “rope” in English.
But that’s back around 900-1300.
I don’t know what term was used in the 1700’s onboard an English ship.
There is one rope on a ship – the rope that rings the bell.
However, in general use, no sailor ever uses the word “rope.” It’s just too general a term. Telling someone to “pull that rope taut” is useless when there are three or four ropes lying on deck. Saying, “tighten the sheet” or “pull on the halyard” gives specific direction as to which rope needs to be attended to.
When I type something about a line on a ship, I type “line”; but then I realized people mightn’t understand exactly what I’m saying, so I go back and change it to “rope”.