Or for that matter, am I just completely overreacting?

How would you deal with the following situation:

I attend a weekly homestudy group with people based at a different church to mine. I go along, because I like the way they structure it and as an added bonus a friend/colleague also attends.
Today we had our usual bible discussion and afterwards random secular things were discussed. One person brought up the matter of how people of a certain nation are "not stupid, just simple" and the conversation went down hill from there. He kept making jokes about people of various nations and throwing them into one pot and saying things that I view as varying from pig ignorant to unknowingly racist. I should probably point out that I was the only non white person there and also the only one not laughing. I didn't say anything, as I'm very outspoken and my personal challenge to myself is to not start quarrels and trying to bear in mind the saying 'if you can't say anything nice..." I felt really uncomfortable. I've grown up facing some very nasty prejudices and don't feel that attitude like that (even if no harm is meant) belong into a Christian group/life. I told my friend this afterwards and she got rather upset.
I'm now not sure whether to continue going to the group, if I should go along next week but bring the matter up, forgive and forget or what? Any thoughts?