My answer should come simply with this statement.
I'm gay.. and I mean VERY gay.. like.. enough to make Fred Phelps go crying home to his church... yet, I still say things like "That was gay."
Do I feel bad for saying it? Not really. Is it a bad thing that I say it? Honestly, I don't think so. Is there better words I could use? Of course.
The reason I use it is simply because it's a way of saying "Well, that was lame/stupid/bull****", merely by the use of slang instead of the "correct" word.
Honestly, I don't ever think of the word "homosexual" when people say things like "That's gay." Now, if they were to say "You're a ***got!" or "You're gay!", then that'd be a different story, and I never ever use those phrases.. ever.
Anyway, my reasoning for not caring about the phrase "that's gay" is simple. When people, myself included, use this word, they ARE NOT always meaning that something is homosexual. As you know, they are just using the word as a replacement for "lame", "stupid", or any other word like that. It is just slang, in this case. It is a way for us to use a word and give it a completely different meaning. There are a LOT of words out there just like this, none of which are wrong in whatever meaning. Why should "gay" being used as a slang word, which is truly all it is for BOTH meanings, be treated as some sort of huge controversial insult?
The typical argument I hear for why it shouldn't be used is that "it puts down homosexuals and offends them." All I say to that is that they need to learn to think for themselves. Yes, some might get offended by it, but.. if they really do, I'm gonna let them handle it. If someone were to ask me to truly stop because I was offending, I would stop.
..but yeah, it's obvious that I don't care for it. People can use a word however they want, as long as it's not purposefully meant to hate... even then, there's nothing anyone can do to stop them except for themselves.