I’m also fairly middle class, in regards to Melbourne’s point of it being slightly more working class.
I’m definitely middle class, and I wouldn’t have had any trouble with the word. But don’t you feel that slang is, in general, more working class and less upper class? I don’t remember ever hearing the word at Melbourne University, and when I was at RMIT the Advanced College was already almost all non-smoking (apart from perhaps the fine-arts and media sections).
It was a word that came with the british immigrants or british tv shows. Many of the “ten pound poms” came out to improve the circumstances they had in the “old country”, so possibly. To me, I hear it in a cockney accent “give us a fag, luv” and it’s some old lady in curlers, a hair net and a pinafore. I could have this idea from it being on shows like Coronation Street (famous British soap opera, they did used to show it on tv here many (many) years ago).
If somebody were to ask me “what’s a fag?” I’d say “a cigarette”. The derogatory term doesn’t spring to mind at all, even though I am aware of it. Being a term for a product that’s becoming obsolete, it isn’t a term you hear around and about any more and I wouldn’t expect young(er) people to know or learn any slang terms for it. (what’s a cigarette? :D)