Slang and trendy vocabulary can be tricky for a writer to use. In a contemporary novel, slang can shorten your story's shelf life unnecessarily--a recurring problem with slang-heavy YA novels that can start to sound stale moments after they land on the shelf.
On the other hand, slang is your friend if you use it judiciously to enhance your story's time period and setting. When a character says "groovy" or "right on!" your reader will be looking for the love beads and sandals, making it a perfect detail to depict the Summer of Love, but not so hot for the Summer of '42.
How do you pick up on the slang and sayings of a particular era? One way is through reference books designed for that purpose. My current project is a novel set in the Roaring Twenties. Since I'm not quite old enough to have lived through that era, I'm relying heavily on a handy volume called The Writer's Guide to Everyday Life from Prohibition through World War II, by Marc McCutcheon. These Writer's Guides, published by Writer's Digest Books, are available for many different eras: the Renaissance, the Middle Ages, Colonial America, Victorian England, and others. They're fun and informative to read even if you're not currently working on a story.
Another great source of period-correct language is old magazines and newspapers. Check your library, antique stores, rummage sales, or online sources like eBay for periodicals published in the era of your story. For even more accurate details, zero in on the magazines your particular character would be most likely to read.
For example, a chic middle-aged matron in November 1936 might have read Delineator, which carried a delightful article titled, "A New Silhouette Means Your Winter Wardrobe Must be Chosen with Wisdom" that talks about "a smart afternoon dress in gray velvet," not to mention "a blouse for the gayest evening frivolities." Who talks like that nowadays? But your character might!
In a different story, a teenager in 1955 may have read Seventeen or Mademoiselle. Even a quick glance at magazines of this era reveals information about styles, movie stars, music trends, and concerns of teenage girls, such as how to tell a "dreamboat" from a "wolf." The Seventeen magazine of 2011 shows that girls are still interested in boys--surprise, surprise--but their concerns are substantially different.
Finding and using appropriate slang can turn your story from sad sack to hunky dory in no time flat, so for crying out loud, get cracking and don't give me none of that jive!