It's not a word I hear often these days, but I don't think I've ever heard it outside the Jewish community. I've never considered it offensive but can see it might be deemed as such in a non-Jewish environment.
I suppose in my view it depends on the context of the sentence and would see it in a similar way as the use of the term "paki", ie if you're talking to someone from Pakistan they often refer to themselves as "pakis" but if you're using it in an intended derogatory way like "oi paki" then it would be offensive.
I don't remember seeing the "n" term used in a non-offensive way since the PC brigade started.
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