From the experts:
Indigo is one of the most appealing and evocative of the new generation of color names. Color names have joined flower and jewel names -- in a big way -- and Indigo, a deep blue-purple dye from plants native to India, is particularly striking for both girls and boys. Indigo is the name of a character in the Ntozake Shange novel Sassafrass, Cypress & Indigo, and was used for his daughter by Lou Diamond Phillips.
Some cultural references: The Indigo Girls are a folk duo, 'Mood Indigo' is a classic Duke Ellington jazz composition, and there is a 1970's New Age theory that Indigo children possess special, sometimes supernatural abilities.