Consider the phrase (and variations thereof), "That's so GAY!"...where gay is used to mean stupid.
Now, I'm sure there are activists out there who take great offense to this transformation of a neutral term for homosexuality into a negative one for generally moronic behavior, but let us take the long view.
Back in the Middle Ages, sinister meant left. Since the left was associated with the Devil, the word sinister soon acquired a negative connotation of evil. Now, all sinister generally means is evil.
Likewise, the word jerk, when applied to a person, used to mean masturbator. Nowadays, though, when I call someone a jerk, I'm probably not accusing the guy of having hairy palms but rather of being an irritating, stupid person.
Starting to see a pattern here? Words with a neutral meaning permanently acquired a negative connotation because the objects of their original meanings were at one time stigmatized. However, the words gradually became generalized insults or negative descriptors as the original meaning of the word itself ceased to be a stigma.
So, perhaps we should take the "That's so GAY!" phrase as a sign of progress, not regression.