"Bud bud" is the sound Indians (brown ones not red ones) make when they talk. My mate reckons they also say "ding ding" afterwards, but I don't see it.
Anyone of Middle Eastern, Indian/Pakistani origin. Generally refers to those who are arrogant and are a disgrace to their religion and native country (Terrorists, Extremists, Corner Shop owners who charge the earth for everything).
-I need some cigarettes
-Oh, the Bud Bud shop is open, go there.
-I'm going to play Call of Duty 4 and shoot some Bud Buds (refering to the Terrorists in the game, or "OpFor").