Retarded. It's a great word. For instance, here's how it can be used in conversation:
Person A: Hey, did you see The Santa Clause 2 yet?
Person B: No, I'm not retarded.
Of course, I don't think that you should actually use the word in that context. In fact, I correct my students when I hear them saying, "That's retarded" just as I do when they say, "That's gay". I use the same correction with both phrases, "Don't use that word in that context."
The thing is, there's something about that word - probably because it has a certain ring to it. I still find myself tempted to use it. What's worse though is that a lot of people I know not only continue to use it (some who work with special needs kids, I might add) but actually defend the use of it.
I could go on and give the arguments that they use and counter them point-for-point, but that's really not necessary. Here's the reason why you shouldn't use it in casual conversation to indicate that something is messed up (or a person is being obtuse).
Let's say you have a child some day. Let's say that child has autism, Down's syndrome, or some other developmental disability. As we all know, kids can be cruel, and no matter what you do, there will be kids who will make fun of him or her. What do you think they'll call them?
Retard, that's what they'll call them. They'll also, no doubt, say things like, "You're retarded". Never mind the fact that this word doesn't really mean all that much, as it's nothing more than a catch-all for anybody who's been unfortunate enough to not be born with the same cognitive functions that most everybody else has.
If that were to happen, suddenly I don't think that saying the word "retarded" so casually would feel so defensible any more.