I consider it offensive because ever since I was a child I have heard it used only in derogatory terms such as, "Those damn Japs", or "Those dirty Japs", or "Stinking Japs" or even used altogether as in "Those dirty, stinking, damn Japs". I never heard the word used in a kind and dear manner and therefore consider it a racial slur ment to demean the race as a whole.
Had WWII never occurred, it may today be considered as an abbreviation for the Japanese race with no ill intent.