You can find a modern discussion of the history of the ghawazi (singular, ghaziyya) at Wikipedia; that article places their origin among the Dom or gypsies of the Middle East. Some descendants of the 19th century ghawazi are said to still exist in the Qena and Luxor regions of Upper Egypt, and aspects of their costume (particularly the vest) are still echoed by belly-dancers today. I've often thought of discussing the history of the raqs sharqi or belly-dance on this blog, and perhaps this post can serve as an inaugural post in the series.
Lane's description of the ghawazi remains the classic one; he also illustrated the ghawazi, but was not primarily an artist. Other, better painters also noted the ghawazi, including the great Orientalist painter David Roberts: