A book I'm reading states that the term barbarian came into being because the Romans, as they were being invaded by these nomadic people, could only make out these people's languages as "bar, bar, bar" sounds. Is that true?
That's essentially how it happened. The word itself is older, and the Romans borrowed it from the Greeks, but you could argue that it was the adoption of the term by the Romans that let it survive to English.
As I mentioned the word is older. You'll also find it in Sanskrit for example, and it's been reconstructed for Proto-Indo-European.
The basic meaning is "speaking unintelligibly", which is how you'll find cognates in modern languages (meaning "stammering", "stuttering" etc). From there it is extended to mean an unintelligible language, which comes to mean "not us", basically. Thus in many language the equivalent term cognate with the Latin has been used to refer to outsiders more generally.
AlienBlue keeps eating my comments. Mods, please help me out if I've ended up double-posting.