Verdict: true. Tech companies that do business with L.A. County really have been told to stop referring to "master/slave" computer connections because of the "cultural diversity and sensitivity of Los Angeles County." Snopes.com looked into it after the story whipped through the tech community and got the confirming memo from a county bureaucrat. A post at Slashdot ("News for Nerds") explains why the terms are used in the computer world -- and gets a bunch of responses.
Update Wednesday 1:20 a.m.: This is the top story on the Daily News website. Here's hoping it's not the lead story in the actual paper.