Professor Julie Coleman, author of the new A Life of Slang, was interviewed on Radio 4 this morning (listen again here for another week - the interview was at 07:43). The book is a history of slang words and Professor Coleman said that the phrase "hang out" has been around for 200 years, and that, although the modern sense of 'chav' is less than 15 years old, the word itself has been around much longer - it is a Romany word meaning 'child'. The word 'gay' has been around for over 500 years and has meant many things over this time including prostitute and garish (of clothes). Its current slang meaning is 'sad' in the sense 'pathetic'.
Professor Coleman said that slang is used by people who are at the bottom of a hierarchy, and who also have a strong sense of identity. Often aggression is not acceptable within the group so slang is an alternative outlet for people's strong feelings.
The interview is here (at 07:43).