In new fiberglass there shouldn't be much in the way of dirt or impurities. The smell probably comes from the way it's manufactured. From Wikipedia (http://en.wikipedia.org/wiki/Fiberglass_batting#Fiberglass_batts_and_blankets
"Fiberglass is energy intensive in manufacture and fibers are wrapped in oil-based resins. Fiberglass batts are typically backed with formaldehyde, a hazardous chemical known to slowly off-gas from the insulation over many years.  The industry has tried to mitigate these issues. Formaldehyde-free batts (which actually contain a very low amount of formaldehyde) and batts made of some recycled fiberglass (up to 30% recycled content) are available."
My guess is it's the oil-based resins you're smelling. I don't know how common the formaldehyde stuff is anymore. All the fiberglass I've used doing construction has been formaldehyde-free.
Nasty job, installing fiberglass! We usually use the stuff that's wrapped in plastic, but still end up getting itchy. Protective gear? Not us macho contractors!
Frank's fiberglass in the eye story makes me think twice about it now, though.