I think it's okay as in informal use (although, when I say it, it's a contraction of my phrase 'gay, but not in a good way').
ah, man! i got it wrong? that's so gay!
Considering that 'gay' has multiple meanings (bad, happy, and homosexual), I don't see the issue with using it as such. I guess it's a little like the word 'fuck' which can have a whole multitude of different meanings, despite it's lack of class. Swearing is bad, kids!