It can have a positive or negative connotation based on the context. Let us take a couple of examples. One involves people and the other involves inanimate things (on the side being compared to sow's ears).
Assume that you're the manager of a team of athletes. You're targeting a big championship but your team is mediocre. If you win, you could say, "I made silk purses of a sow's ear." If you lose, you could say, "I did my best to make silk purses of a sow's ear." In both cases, your effort indicated may hold a positive meaning but the team is obviously referred to as sub-par, and so may be considered somewhat insulting to them.
Assume you are making a magnificent chair out of broken pieces of wood. In this case, you have made silk purses of a sow's ear but there is no insult involved, just excellent craftsmanship.