I've also experienced this. Mainly Indian people, hispanics, and people who have moved here from Africa (no, not African Americans. I mean people who were born and raised in Africa or moved here as teens).
Most Muslims I have met have been hesitant, but all have been very curious and warmed up once they saw that Koda is very mild-mannered.
The others, however, avoid her. I've had people cross the road, run the other direction, completely reroute themselves, duck into different aisles in the store, etc. I have never had someone scream though.
I think it's just like everyone else has said. Part of it is religion (dogs being of the devil or unclean), the conditions of the country of their birth, the conditioning of their parents (I would think that even kids born here would become afraid if their parents continued to scream and freak out about dogs), etc.
I believe there is also a phobia of dogs? Though it's rare and wouldn't be limited to foreign people :P
Qb and Amira- VERY nice posts!