The OED has 1839 as the first appearance in print although that use was not in respect to books. The first use of unputdownable as a description of an engrossing read was in 1935, as DNSB mentions above. It was used in an advertisement in the New York Times for a book titled Memory of Love, which the ad described as "unusually ‘un-put-down-able’." The hyphens come and go in various usages.
My opinion is that it's a clunky word, but useful in that it conveys a sense of how riveting a book might be to a reader in one word instead of a bunch. If I were writing a review, I would probably find another way of describing my enjoyment, but it doesn't put me off to encounter it.
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