Is Gypsy really a bad word?

First things first, Madonna: never call a Gypsy a gypsy.

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There are somewhere between 8-10 million Roma or Romani (derogatively referred to as “gypsy”, the lowercase “g” insinuating that it’s not a proper noun) currently living in Eastern Europe. It’s impossible to get an accurate count because of the number of Roma who are undocumented by governments that still refuse to claim them or to acknowledge their existence as anything other than outsider.
With the resurgence of hate crimes against the Roma throughout Eastern Europe, the Western World is starting to ask, “Who are these people exactly?” Even though the Roma have been persecuted and murdered in droves since well before WWII, it has taken the general global public decades to become interested.

- See more at: http://www.3quarksdaily.com/3quarksdaily/2014/04/dont-call-a-gypsy-a-gypsy.html#sthash.4IaW2q89.dpuf

From what I can remember the root of the word Gypsy is the same as Egypt or Copt (as the Gypsies were initially assumed to be from Egypt) so it's not in itself derogatory.

In vein of this piece, I remember this paragraph by Steve:

Millions of people permanently lose the thread. Unlike academic specialists, they have other, more personally important things to think about than the changing names of distant ethnic groups. Thus, they never make the mental connection that the mysterious new Inuit their children are studying in school are actually those Eskimos that they liked reading about when they were the same age, or that these new-fangled Roma aren't Romans or Romanians, but are actually the Gypsies who play that wonderful violin music.

In attempts to create a new name unburdened by old prejudices, the name game can end up dissipating the goodwill built up toward the old one.

Read more: Feature: Name game - 'Inuit' or 'Eskimo'?

The part in bold is a nod to nonsensical name change in India in the 90's. If India were to ever rename itself Bharat or Egypt to Misr that would trash billions of dollars of PR. As we learnt from the debacle of New Coke never f*ck with the brand people and there was no better brand than Bombay.