The strange thing about Engilsh is that the copula, for saying things like "They are Japanese" is the same as the verb to exist, as in "They are (in this room").

In Japanese they are different
da, Desu = copula
Watashi ha nihonjin desu = I am Japanese

aru, iru, arimasu, imasu = to exist
Karera wa (kono heya ni) iru "They are (in this room)"
koppu ga aru. There is (or I have) a cup.

iru is for living things
aru is for non living things and living things

Then there are several orders of politeness
INformal = da, aru, iru
Medimu polite = desu arimasu imasu
Polite = degozaimasu, gozaimasu, irasshaimasu


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Note added at 2002-03-31 23:26:44 (GMT)
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aru is for non living things and living things under certain circumstances, such as when talked about in the abstract or perhaps when one does not really think of them as living, like a disease perhaps. I am not sure on the dividing line since it is pretty fuzzy. But using iru (imasu) for living things and aru (arimasu) for non living, is safe.