When publisher George Allen first received the manuscript of The Hobbit from dusty academic J.R.R. Tolkien, he gave his ten-year-old son a shilling (about fifty cents) to write a report on whether he should publish it. His son later commented: that was "the best shilling my father ever spent" (source: "Jumping on to the Baggins wagon," The Times, December 28, 1991). We owe so much to this one kid and his fifty cents.
In the original drafts of The Hobbit, the names were completely different: Thorin Oakenshield was supposed to be Gandalf the Dwarf, Gandalf was going to be Bladorthin the Wizard, and (our personal favorite) Beorn was originally Medwed the Werebear. (source)
The Hobbit received a prize of fifty English pounds for Best Children's Story of the Year in 1937. When Tolkien opened the letter over breakfast, he gave the money straight to Edith, his wife, to cover an outstanding doctor's bill (source: June Southworth, "The Extraordinary Tale of How the Hobbit at Last Saw the Light of Day," Daily Mail (London), January 6, 1992).
In an interview, Tolkien commented: "I don't know where the word [hobbit] came from. You can't catch your mind out. It might have been associated with Sinclair Lewis's Babbitt. Certainly not rabbit, as some people think" (source: Charlotte and Denis Plimmer, "The Man Who Understands Hobbits, Daily Telegraph, March 22, 1968). Babbitt is a novel of middle-class conformity, so we guess there could be something related to the hobbits there? It's a little funny that Tolkien protests so vocally that the word hobbit does not come from rabbit, since Bilbo gets compared to rabbits so often in The Hobbit.
The word "hobbit" does appear in one pre-Tolkien source: James Hardy's edition of The Denham Tracts: A Collection of Folklore by Michael Aislabie Denham (source).
J.R.R. Tolkien left all of his manuscripts to his youngest son, Christopher Tolkien. Christopher Tolkien published The Silmarillion and The History of Middle Earth after his father's death to provide Tolkien scholars with further insight into the folklore and history of his father's extensive texts. Christopher Tolkien is also very strict about maintaining the rights to his father's literary legacy: in 2009, he and his sister, Priscilla, won a 90-million-pound lawsuit again New Line Studios for not sharing in the profits from the three Lord of the Rings films. (source: Jenny Booth, "Tolkien Heirs Win Battle of the Rings; Company to Hand Over a Share of the Huge Profits," The Times (London), September 10, 2009.)
From 1926 to around 1930 or 1931, Tolkien founded and ran an Icelandic Club at Oxford called the Kolbítar (Coal-biter) Club. The members of this club used to sit around drinking beer and reading Icelandic sagas aloud (sounds like fun!). Tolkien's friend and Narnia author C.S. Lewis was also a member of this club. The Inklings, a famous circle of writers including Tolkien, Lewis, and mystery author Dorothy Sayers, grew out of the Kolbítar Club's meetings (source:The Annotated Hobbit: Revised and Expanded Edition. Edited by Douglas A. Anderson. Boston and New York: Houghton Mifflin, 2002. 3).
As proof of how widespread and famous the term "hobbit" has become, anthropologists used it to name a mysterious, three-foot tall skeleton found in Indonesia in 2003. The remains are about 18,000 years old. While scientists agree that this skeleton probably belongs to a new species, it's controversial whether this species is human or not (source).