http://www.bbc.co.uk/newsbeat/24984781

Unfortunately it's come to mean something else recently and that happens with a lot of words and terms, going through phases of 'popularity'. Though I can see why gay people might take offence. IIRC the Beeb okayed Mr Moyles saying it on air, make of that what you will...

Yeah, I kind of made that mistake with a bisexual gf a while ago. She really really didn't like it much.

Given that "gay" used to mean happy, I fail to see why homosexual people are upset that it no longer refers to them. I certainly use the word "gay" as the new "lame".

But it does still refer to homosexual people. There hasn't been a clear transition away from Gay being used to refer to homosexuality so it's use as a negative or derisory term is saying to the homosexual community that they are by association also bad/wrong/a bit sh!t.
While gay adults may be able to just shrug it off (and that's by no mean guaranteed) it's a different matter for children and teenagers who are in the process of developing their own sexual identity. If you are being bombarded with language that equates what you feel/believe about yourself to be wrong/bad or something to be ashamed of then it's certainly got the potential to put a major dent in your confidence and sense of self.

So we have three definitions of gay
1) Bright and colourful
2) Homosexual
3) Something rubbish.

The problem is that 3) is derived from an insult from 2).
Even if poeple say 3) without harbering any hate towards homosexuals, the very fact that that's how 3) was derived can mean it can be taken as a negative by people. I know people who are pro gay rights, but still use 3) as to them it's an entirely different word now.

I hear kids say "that is just gay" when something is considered rubbish, but I seriously doubt any feeling or intent goes into it; any more than "oh my god!" is meant as anything other than a expression of exasperation.

Get over it.

Something being "gay" as in lame was in use when I was at school in the 80s...

Well there you go. Cling to this mortal coil long enough, and perhaps something will one day be "hip".

So how far back would you go with respect to the history of a word/phrase? What about eenie-meanie-minie-mo? This was something I learnt as a kid to choose things and yet it has a racist past. Does this mean all kids should stop using it because it is racist, without them realising?

If it is still niggers that they are catching by the toe, then that should definitely be frowned upon. Otherwise the comparison is spurious. Gay is still a term for homosexuals and its simultaneous use as a pejorative is a transitive property derived from that fact.

They switched to being gay because they didn't enjoy being fairies, shirtlifters, and queers. Exactly how much of our language do we have to give over to being rude to them before we decide to just be less rude?

<edit> I'm mildly surprised I didn't get a [lifted] there, have I broken the swear filter's will to censor?