For the record, I have no problem using "that's so gay" to describe something that is actually gay. E.g., the aforementioned Cher concert, quoting Bette Davis, fawning over a basketball player, or dressing like this:
I personally find saying "that's so gay" to mean something lame, stupid, or undesirable quite offensive. That said, I am well aware the Constitution does not guarantee us the right to not be offended, so I generally let it go unless it's someone I know and/or feel comfortable sharing my feelings with.