Me neither. Peskin/Schroeder is pretty unclear concerning propagators and its analytic properties.
First of all, one has to specify which propagator one is talking about, and this depends on what you want to do with it. In the case of perturbation theory in vacuum qft you need the time-ordered propagator, which is defined as the vacuum-expectation value of free field operators (here for an uncharged Klein-Gordon field)
\mathrm{i} D(x-y)=\langle 0|\mathcal{T}_c \hat{\phi}(x) \hat{\phi}(y)|0\rangle.
Now you plug in the expansion of the field operator in terms of creation and annihilation operators
\hat{\phi}(x)=\int_{\mathbb{R}^3} \frac{\mathrm{d}^3 \vec{p}}{\sqrt{(2 \pi)^3 2 \omega(\vec{p})}} [\hat{a}(\vec{p}) \exp(-p \cdot x) + \hat{a}^{\dagger}(\vec{p}) \exp(+p \cdot x) ]_{p^0=\omega(\vec{p})}.
Then you can write the propgator after some algebra with vacuum expectation values of annihilation and creation operator products as
\mathrm{i} D(x-y)=\int_{\mathbb{R}^3} \frac{\mathrm{d}^3 \vec{p}}{(2 \pi)^3 2 \omega(\vec{p})} \left [\Theta(\xi^0) \exp(-\mathrm{i} p \cdot \xi) + \Theta(-\xi) \exp(+\mathrm{i} p \cdot \xi) \right]_{p^0=\omega(\vec{p}),\xi=x-y}.
Now you take the Fourier transform of this wrt. \xi with a regulating factor \exp(-\epsilon |\xi^0|), which leads you to
\tilde{D}(p)=\int_{\mathbb{R}^4} \mathrm{d} \xi D(\xi) \exp(+\mathrm{i} p \cdot \<br />
\xi)=\frac{1}{p^2-m^2+\mathrm{i} \epsilon}.
The \mathrm{i} \epsilon has to be understood to be taken in the weak limit \epsilon \rightarrow 0^+.
For a more detailed explanation, why one has to use this time-ordered propagator, and also this derivation, see my QFT manuscript,
http://fias.uni-frankfurt.de/~hees/publ/lect.pdf
Chapter 3.