[kzrdude]

Spanish nouns have two genders, and a corresponding plural for a noun of that genders. When you have a mixed group, both chicos (boys) and chicas (girls) you use the masuline plural (chicos).

I've also noticed that male genitalia are used to mean something positive (es la polla, tener cojones)

and female genitalia are generally used to be negative (un coñazo, coño)

[michaelmior]

I think the suggestion was that you could use "chicos y chicas." But I don't imagine any native Spanish speaker would find chicos discriminatory.

[kzrdude]

There is certainly some awareness of the issue. For example preferering neutral words such as estudiantes in some contexts.