New archival material and research seems to be showing that -- as is always the case with history -- the reality was a lot more complicated than that. However, I fear that this distorted image has gotten deeply ingrained in many minds today.
One of the most useful books I've read that unpacks the controversy is José M. Sanchez's Pius XII And the Holocaust: Understanding the Controversy (CUA 2002). Since then, others have appeared that are a lot more apologetic towards the late Pontiff.
It was interesting then to come across (thanks Fr. Z) this October 2006 Inside the Vatican newsflash adding another archival bit to the data that shows that Pope Pius XII was very little (if at all) like what his detractors make him out to be.
n a remarkable historical find, testimony has emerged revealing that, in 1941, Pope Pius XII received a German Jewish visitor at the Vatican who was seeking help for certain Jews who were being held in an Italian internment camp. After welcoming the young man and promising him help, Pius told him not once but twice--in emotional language, in front of a large group that included German soldiers--"Be proud to be a Jew!"
The amazing testimony, written as a first-hand account by an anonymous Jewish author in wartime Palestine, originally appeared on April 28, 1944 in The Palestine Post (now, The Jerusalem Post), the most influential Jewish publication in the world at that time.