Someone who is very afraid to do something. More than just a plain old "wuss" or "wussy". There is so much wuss to go around, that you need a bag to fill it up with. This person is a bag worth of wuss, hence the term wussbag.
Guy #1: Hey, are you gonna come egg that guys house tonight?
Guy #2: No, I don't really feel like it, what if we get in trouble?
Guy #1: Come on man, don't be a wussbag.