we had a bbq round a friend's house earlier, and one of her flatmates (whom we all dislike) was using terms like paki, chinky, ching-chong etc, and everytime he said one, the room just went silent and we told him off. He even managed to point at a drunk/drugged up hobo... whilst holding a knife, leading to arguements. Silly bugger.
also my mum uses those kinda terms, which i find really unacceptable and tell her off EVERY TIME, and then she's like 'ok asian people then' in a kinda patronising/childish way. Kinda funny though, my parents are racist, yet the majority of my friends are non-english (and also, bar a few exceptions, i find english girls remarkably unattractive, hmm...)
EDIT: I also remember a few years ago having a go at my sri-lankan buddie, as after a chinsese guy ran past at a train station, he yelled like 'RUN CHING CHONG CHINAMAN', for no reason at all. Douche. Though his dad got like 0.09% of the votes at the last sri lankan election, so really lol, maybe you shouldn't help design the election posters next time bro.