"The situation is little good" doesn't make sense. I'm not sure if it's grammatically incorrect to say "of little good" but it's certainly not common. Usually you see phrases like "It is of little use" or "It is of little importance", which mean "It is not very useful" and "It is not very important". Hope this helps!

One can say "Little good can/will come of the situation", but I agree with Shane that "The situation is little good" would not be said by an English-speaker. Another word - value, use, help, importance, ... - would probably be better than "good" in "The situation is of little good".