Depends whose says the word similar to the word nigger. if said by an anglo-saxon or any other non-asian race than its a derogatory racist term. If said by a Pakistani then it is an urban term of nationality. Sometimes said to be just a short term for Pakistani. But again depends who says the term.
Pakistanis and other South-asians suffered a lot of racist abuse during the early years of immigration into Britain the term used by Nazi Scum who support (the BNP and National Front) in Britain was Pakis. The first generation accepted it as they were not very much in touch with society's views about them, they were here to live in peace and work their arses off for their children and families back home. But after that generation there is no more acceptance of this racism, by Pakistanis or by the general good British public. As was seen in the Bradford, Burnley and Oldham riots in 2001.
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