Before I make my point, I want to say that racism needn’t be inherently bad. There’s nothing wrong with races being superior at some things naturally and weaker at others. It has been demonstrated a great many times that while the overall whole may have certain tendencies, any individual can overcome their natural shortcomings. There’s also nothing wrong with taking some humor in racism, provided said racism does not actually make an impact in things which actually affect people’s lives.
On my main point, Street Fighter seems to be more about cultural stereotypes than racial. I do see a lot of sexism, though. Notice how every female character (at least in 4, dunno about others) has below-average health and most of them appeal to certain fetishes.
Chun-Li: legs and bending over (like anyone uses Kikoken because it’s good)
Cammy: T&A, make sure you get the cheeks
Sakura: Schoolgirl, upskirt (she seems to dislike pants)
Crimson Viper: MILF, professional dominant businesswoman, abs
Rose: Moreso with the alternate, belly-dancer/gypsy
Juri: Crazy psycho and a massive sadist. Nobody would be more up for S&M than her.
Makoto: Probably the least to do with any fetish. I personally love a girl in karate uniform, but it doesn’t seem to be big enough to really call it a fetish.
Ibuki: This one’s for the hentai fans, specifically La Blue Girl. Ninja but doesn’t wanna be, missing clothing for no apparent reason around her midsection.
On cultural stereotypes
Abel: Rather N/A, though because it takes a lot of skill to use him effectively, you could say it’s a subtle “french surrender” joke.
Adon: I don’t know enough about Thailand to say anything here. Same goes for Sagat.
Shotokon style overall: Yeah, because every asian guy has to be a martial arts master in the same style.
Balrog/Bison: This one really is a statement about black American culture, most emphasized by second alternate. One of the most racist stereotypes here.
Blanka: When you think of South America (not Central America), generally I think of jungles or else its ancient history. Blanka really fits into that animalistic role, though I imagine his original reason for inclusion was to have an animal for others to fight against.
Cody: Simply put: Americans are jerks.
Dee Jay: This one does look to be all racial with just a hint of cultural to it. At least this one is more positive.
Dhalsim: Of course everybody in India has to be starving, enlightened, peaceful, love elephants, and they all can breathe fire.
Dudley: This one’s so loaded to people looking for racial stereotypes. While he is not one himself (far more a British stereotype than anything), I can just see this coming from a big leader like Al Sharpton upon seeing the boxer of 2. “WTH? No, that is not a black boxer. Gimme that thing; I’ll show you a black boxer.” It’s… uh… racist because it’s not racist at all?
Edward Honda: Sumo gets somewhat of a pass for being as unique as it is, though as I understand it, sumo wrestlers are very highly respected in Japan.
El Fuerte: Holy crap, this guy is nothing but racism! First, he’s a Mexican, so of course that means he has to work in the kitchen (and all his food has to be terrible). When you get to his gameplay, he does what any Mexican does best: run really fast and jump really high. Can you not see he was designed to jump fences all day long?
Fei Long: [media=youtube]4jopstEt1kQ"[/media] He’s eastern Asian, and therefore is a kung fu movie star.
Gen: As with the whole shoto thing, even an old man is deadly in eastern Asia. This one just kills you by poking appropriately.
Guile: It’s totally what Americans love about themselves and what the rest of the world hates about them. He embodies the entire military spirit of America with freaking American flag tattoos on his arms! (also, improperly done for a soldier to have on his right arm, as the stars would be to his back)
Guy: Someone else can take this. I know very little about the guy.
Hakan: His gameplay is more about making Turkish wrestling a joke, but have you seen his ending? Smokin’ hot wife and tons of kids all very close in age. Oh yeah, and he has to be an oil tycoon because he’s in the middle east. Edible oil, but still.
Ken & Ryu specifically: See, in Japan they do things right, with the proper tools to answer anything and a focus on spiritual power (Hadoken). In America, we’ve got to be entertained by lots of things happening and add flames to everything.
Rufus: Haven’t you heard? Americans are all fat, sci-fi geeks with heavy ADD. Their women (Candy) are also all airheads and perfect sluts.
T. Hawk: In love with the land and the animals, the stereotype here exists more within his story than what he does in gameplay. He does like the air a lot though, so he identifies with his hawk name.
Claw: I’m sure he’s only Spanish because they couldn’t figure out a way to make a unique style involving France. He’s more a statement about that general area in his narcissism.
Zangief: All Russian men are required by law to acquire gigantic muscle mass and have as much body hair as humanly possible.
Finally, in response to comment about this supposed to be a worldwide thing and yet few countries get a lot of characters. Capcom of Japan and America were both responsible for creating Street Fighter. You simply work with what you know. I certainly know more about the many cultural flavors in America than I would in someplace like Egypt, so I’d have more tools with which to work in that regard.