I am split on this issue because today I know what my kids listen to on their radio. I also have children with diverse friends and ALL seem to use this word...and they use it right in front of the black boys or girls that are their friends. I will tell you my story of what happened with my son:
He has an xbox and he can change his name on there to say anything as long as someone else don't have that name: He changes it all the time. At one point he wrote as his name: Ilove(n)... His black friends were saying thanks (in their language) lol...
When I first heard he wrote that I told him to not do that because of my 'prejudice' of that word... I ended up asking him to change it even after he told me that no one was insulted. I said at least change it to niga or something which I think he diid... Now his name is changed again but the point of this story is that yesterday the word had a derogatory meaning and today its meaning means nothing of the sort or my children would be fighting a lot.....
I still feel that it is wrong for me to use this word. I can't get passed the ingrained meaning that I was taught it meant. I won't put that on my children. I will just ask and teach them to be respectful. They are still doing this :) even using this word I believe.