I think this varies a lot depending on which english speaking communities you are in and your tone of voice.
Personally I often say something was pretty good and mean it as quite high praise or at least better than I expected. I think (hope) my tone of voice would make that apparent though.
Same here. I grew up in New England, where I think this usage is pretty common. People delight in giving me grief "you are only 'pretty happy'? Shouldn't you be happy...."
