It has for roughly five years been used as a group name by middle class English youth to describe their working class (poorer) opposite numbers (usually white and applying to both sexes). It isn't a neutral term: it means ugly, smelly, dirty and so on.
The person using the term most likely considers themselves more sensitive, more artisitc, more open-minded, and more "against teh system!!1!" than the "chavs", and is simply not interested in the following ludicrous ideas:
a) working class people do not all pose a threat to one's health/expensive mobile phone/taxpayer's money(!!11!!)
b) working class people who do pose a threat may do so because of their treatment by the economic system, and not through their own personalities
c) hating working class people based on the fact they can't afford the same expensive "anti-establishment" (Hot Topic and similar) clothes as you is actually playing straight into the hands of the establishment
d) why is Pete Doherty cool but "OMG some smackhead on the street isn't"
e) the working class are "people"
His friend: "Yeah I know Chavs aren't very nice people when you think about it"
Poor person: "Thanks for leaving, because we don't want a spoiled, arrogant arsehole here."
Its use often reflects both a fear of its target and a deeply unpleasant sense of social superiority. Parallel fears of relative poverty can be found throughout history, from worries about Victorian street urchins to contempt for medieval peasants.
Its users arguably deserve every bit of grief they get from those they describe as such.