Who cares? That's just politically correct bullshit. Just because you have a gay friend or a retarded friend doesn't mean you have the right to get all high and mighty about it. My best friend's brother is retarded and I'll tell you he'd probably be more pissed off about somebody making a big deal about somebody using the word retarded than somebody actually using it.
Its fucking slang, stop being so sensitive and deal with it. In the 70's we still used the word Mongoloid to refer to people with down syndrome. Its all just language, getting offended is the only thing that gives the words power. Getting offended at the use of the word retarded is the only thing thats putting a negative connotation on it. If we just accepted it then it wouldn't even be an offensive word.