Not all girls do. But speaking for this girl:
1) Nervousness. I giggle when I get nervous, and the first few times I saw a guy's genitalia, I was pretty nervous. ;]
2) Unfamiliarity. Something you see every day probably doesn't look unusual or funny to you, but again, the first few times a girl has (possibly EVER) seen a guy's penis/scrotum in real life are kind of unsettling, in my case, anyway.
It's almost definitely nothing to do with size, or whether those particular genitals have anything "wrong" with them, and more about nervousness and unfamiliarity. (There are always mean people, though, who just like to laugh at how others look, but that seems to extend to faces, etc.)
"Ooh, I'll settle down with some old story/About a boy who's just like me/Thought there was love in everything and everyone, you're so naive!"-Belle and Sebastian, "Get Me Away From Here I'm Dying"