Recently there has been significant research focus on distributed computing network massively caching and replica placement problems for content distribution in globally. Peer-to-Peer (P2P) network provides dynamically decentralized, self organized, scalable objects in distributed computing system. However such networks suffer from high latency, network traffic and cache update problems. The existing caching and replica placement techniques for placing objects across peer-to-peer network have no complete solution to these problems. This paper presents an overview of the current challenges present in P2P overlay networks, followed by describes briefly the analysis study of the existing algorithms and their merits and demerits. And also suggest a new popularity based QoS-aware(Quality of Service) smart replica placement algorithm for content distribution in peer- to-peer overlay networks which overcomes the access latency, fault tolerance, network traffic and redundancy problems with low cost. The new algorithm suggested is based on the outcome of the analysis study.