What's up, as a greeting is very common in AmE. You commonly hear it shorted to 'sup nowadays with younger generations.
While it is common to reply in kind as Jutfrank suggested, it's also very common to respond with something like not much (you?) I do use the expression myself, and if I'm actually doing something, I'll respond literally. Otherwise, I'll just respond with not much/nothing, or as is common in my region, nada.