The Kelvinator: I agree with bass. There's nothing racist about saying Jap, it's just a shortened version of Japanese.
That's like saying that calling someone an Aussie is racist. It's just... not.
While the term Jap originally started out as simply a shortened version Japanese, after WWII many Japanese felt the term was offensive and derogatory. Therefore, you shouldn't use it.
Burn the land and boil the sea, you can't take the sky from me.