I've only heard it considered so in England. But that could be my limited exposure to its use. - Edit 1
Before modification by TaskmasterJack at 04/11/2010 03:55:34 PM
And I think it's because it mirrors the way all Hispanics, no matter country they are from, are called "Mexicans" in some areas of the United States. So I guess it's derogatory sounding if it seems you're referring to all Middle Eastern looking people as "Pakis".