Actually Aryan it depends my friend. "Paki" can be taken many ways not just the bad way... it is basically a short term for "Pakistani" to most people. Unlike the term used to describe African Americans or what not. That word was actually created on the base of being an insult.
Many words and names have short versions and I actually believe "Paki" is a short for "Pakistani." Yes you are right it can be derogatory however not to all Pakistani's.
I mean the word doesn't hold any wrong meaning to it either, its just a short version. It depends on who you ask actually. If you ask a very patriotic pakistani he will most likely be offended but perhaps if you ask a regular citizen who respects his country and loves it but isn't as deep as a patriotic person he won't be offended at all. The term "Paki " cannot be compared to the term used to describe African-American's. Also african americans do not mind if you would call them reffering to their color. It is actually more common than saying African-American.
So yes the term "Paki" can be offending, It certainly can however not to all Pakistani's. The person who would most likely say it is not trying to offend one but probably just thought "paki" sounds better I suppose opposed to the long version. It just depends on who you ask and who you are using it towards.
Oh yes I forgot to mention. My heritage is Paki.
Regards,
Khizerđ