I think the children's puzzler "Fuzzy Wuzzy was a bear, but Fuzzy Wuzzy had no hair. So Fuzzy Wuzzy wasn't fuzzy was he?" is better known despite the Urban Dctionary selection biased votes.
The term is from a Kipling poem[3]:
"A derogatory term for a black person, especially one with fuzzy hair... From... one of Rudyard Kipling's... poems, written in 1918. The poem is in the voice of an unsophisticated British soldier and expresses admiration rather than contempt, although expressed in terms that sound patronizing today."
[1] http://en.wikipedia.org/wiki/Dads_Army