Prawfs blog has a post explaining with quotations from the newly passed Arizona immigration statute and the relevant U.S. Supreme Court and Arizona Supreme Court cases obliquely referenced in the statute that the law does expressly allow for racial profiling by police in connection with their new duty under the law to enforce immigration laws.
The law forbids racially profiling except as permitted by the U.S. Constitution and Arizona Constitution, but the respective supreme courts have held that racial profiling is allowed in immigration enforcement.
The recently passed law has spawned a boycott of Arizona by the Denver Public Schools, and lawsuits by both private parties and the federal government asking that the law be declared unconstitutional, largely on the grounds that enforcement of immigration laws is exclusively the province of the federal government. Hearings in those cases are in progress.
Meanwhile, armed neo-Nazi vigilantes are patrolling the Arizona border (admittedly without immigration office encouragement), another piece of the situation that points to the racist dimension of the Arizona legislation.