It's just Scots slang for scrotum. Baw = ball. Like fitbaw = football and bawsack = ballsack.
There's a few of them in the older GTA games. I don't remember any Scots slang jokes in GTAIV though. Here's another example:
http://gta.wikia.com/Pissh.
There's a store in one of the games called "Gash" which is Scots slang for crap and rubbish.
There's also a lot of little nods in the radio station chatter too.
The horse racing in GTA SA has a lot of nods with the horse names some in reference to football players like Nenrik Larsson.