It is a contraction of "wassup?",
which is itself a contraction of "what is up?",
which is an American urban colloquialism for "What is happening?"
which, in its turn is a polite enquiry after the latest general news that the speaker wishes to acquire from his friend.
So, it looks this is really a hyper-contracted "What's up?". Then, on the pronunciation part, I would not even begin to understand what was meant if someone, possibly early in the morning, hissed at me /zzup/ with a 'z'. For all I know, I might even turn violent.