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They're so stupid and funny, they don't act like the cold-blooded robots in Terminator at all... so I first thought that they must be conscious.
But then I realized that the Jedi mercilessly kill these droids all the time without any remorse. This would be contrary to the Jedi Code if these droids are self-aware.
Let's start by saying that we do not know what self-awareness actually is. We do not have a set algorithm for deciding whether species we encounter is self-aware or not. We are left with behavioral tests that provide circumstantial evidence, like recognizing oneself in the mirror. That said, any assesment of their self-awareness without direct quote might always prove to be incorrect. Let's try anyway.
In the begining, at the Battle of Naboo time, they were most probably not self-aware. As I mentioned in the comment to @Thaddeus' answer, being completely reliant on central command center to function removes that possibility. Command center might be self-aware, even intelligent, and imprint some of it's personality into the droids it commands - but that's pure speculation.
That apparently changed in subsequent movies, where no targetable command center is shown and yet all the droids seem to work. As Wookieepedia states:
Although the earlier generations were entirely dependent on Central Control Computers, post-Naboo models featured a great degree of independence and personality. Many older droids that were originally reliant on Control Computers developed personality quirks and a tendency to excessively comment on their situations.
-Wookieepedia
However the reference they give for the first sentence is simply the third movie, which does not seem to be a strong evidence.
In my opinion, B1 battle droids never ceased to rely on command center - only on one in different form. How exactly is unknown (command network? redundant command centers on every capital ship with dynamic network topology?), but there is evidence for that in the Star Wars Roleplaying Game Saga Edition Core Rulebook
Battle Droids are drones controlled by a remote processor, taking their commands from a Central Control Computer (...) B1 Series Battle Droids can't be played as droid heroes
-Star Wars Roleplaying Game Saga Edition Core Rulebook page 199
That shows that being remotely controlled is an integral part of their being. They do not have the capacity of becoming independent "self-owned" droid - which is a prequesite for being a player character AND what looks like a good measure of whether they can be self-aware. That's in contrast with B2 series which
(...) relies on a central computer for guidance, but doesn't deactivate when it loses contact with the remote processor thanks to backup internal processor - a droid brain that takes over when the droid looses communication with the central computer (...) Super Battle Droids can be played as droid heroes
-page 199
In conclusion: B2 series might be self-aware. B1 - most probably not.
I realize it's been half a year since the last answer (which I misread as Jan 27 '16), but I feel this is pertinent information which hasn't been mentioned yet.
In Star Wars: The Clone Wars Comic UK 6.26, there was a comic called "The Only Good Clanker" about a B1 battle droid named Coppertop. He was part of an experiment performed by Count Dooku to determine what would happen if a droid was ordered to disregard its primary programming (aka Order 99, no points for guessing what that led to).
Here's the in depth of it, courtesy of Wookieepedia (emphasis mine):
As a consequence of the activation of Order 99 during his service on Bogoa, Coppertop underwent a major personality change, and his primary aim became to ignore his old, combat-oriented programming and to come to the aid of weak and wounded beings instead. He believed that helping injured clone troopers—his former enemies—was the right thing to do, because the Humans were treated as expendable in the same way that battle droids like himself were, and he gained an aversion to fighting and sought to resolve conflict through peaceful means.
The change in his programming caused Coppertop to gain a greater degree of individuality. He sought to live as a free droid rather than to serve the Droid Army, and felt that conviction to such an extent that he would rather deactivate himself than return to the Confederacy. In addition, he customized his appearance, gaining mandibles on the side of his face and a gold-colored crest atop his head. He also took to wearing a cape and he marked his torso with an inverted red stripe.
As far as I understand it, he wasn't reprogrammed to do any of these things; it's simply what happens when a B1 is denied a primary objective (i.e. given free reign over itself).
Class one droids which functioned primarily as computing support were considered little more than mobile computers, without personality.
The class of droids known as battle droids were class four droids with sophisticated AIs designed for independent action (capable of being guided through central intelligence hubs for better coordinated effort).
Since droids have sophisticated artificial intelligence and are treated in many Star Wars books as having thoughts and feelings, they are considered self-aware but capable of being programmed to perform activities counter to normal life sustaining protocols. Unlike living things, they can be programmed to work against their own self interests.
From Wookieepedia: Droid entry
Definition of a droid: "A mechanical and/or electronic construct designed and put into service to assist organic life."
REF: (Cynabar's Fantastic Technology: Droids; West End Games)
The words droid and robot are generally taken to mean the same thing. However, the official definition of a droid is "a mechanical being with a self-aware consciousness, as distinguished from a computer by having a self-contained method of locomotion."
―Cybot Galactica Design Team Operations Manual
I'm gonna go out on a limb and side with that last response from Deltharis. It seems to me it was most likely the battle droid station's CPU reacting to things it saw on the field, and the droids were only speaking those thoughts aloud. Imagine if you were a central brain and had control over thousands of droids, would you keep your errant thoughts silent all the time? Probably not, if such a failsafe were not programmed in. And going by the quality of B1s in general, the trade federation is too cheap. When we see droids speaking in the Clone Wars series, where are they located? In/near bases and spaceships. Which likely have CPUs for controlling those droids. In other words, there's a decent chance B1 central CPUs function like ships in Iain Banks' Culture series. It's the CPUs that are marginally self-aware, not the B1.
As to B1s speaking in the field and seeming to have personalities, well, I would say it's like if rodents could speak, the individual B1 is not self-aware, but once it's produced and off the factory line it does have enough AI to allow it to recall its own experiences. If it did not have such a thing, it would be little more than a walking turret and unable to operate vehicles.
Anyway, that's just my take from the information we've received thus far as a random passerby. Imagine them like Roombas with guns or those Battlebots but bipedal and speaking.
There isn’t only one instance where a B1 has been given free will from what I know there are three. One B1 took head damage and gained better (If not cooler) combat skills also he decided he would fight for the Republic. And of course there is Coppertop. But also one took a shot from a explosion and suffered head damage, he decided to flee the field of battle. (A B2 chased him and when the B2’s power was low he gained emotion)
Keep in mind that all sapient beings have different kinds of self awareness.
The B1 would be around the mental ability of a 7 year old human some more clever than others.
Then again, even human kids do not recognize themselves in a mirror all the time or before a certain age.
And lastly, since someone above mentioned Jedi and droids, remember the first line of the "Jedi Code" - There is no emotion, there is peace.
In effect, the Jedi are trying to become droids, programming themselves just like droids are coded. And discarding their emotions just like droids.
