I have noticed that kids say three words that weren't okay when I was a kid, and they shouldn't be okay now: sucks, retarded, and gay.
1. Sucks: When I was in school, it was your ass if you said "this sucks!" Now, it's perfectly fine, and in fact, kids are genuinely surprised when I reprimand them for saying this; They really have no idea that they have done anything wrong. The problem is, saying "this sucks" is really an abreviation for "this sucks dick," which I think we all can agree is not appropriate.
2. Retarded: I hear this one all the time now on TV, and I just don't get why this isn't offensive. What's good to do to kids who say this is to abruptly say, "Hey! My brother's mentally retarded." When they say, "He is?" Say, "No. I don't have a brother, but don't say that word in that sense. It's cruel."
3. Gay: If you're talking about someone being happy or homosexual, by all means, use this happy little word, but if you're using to say something is stupid, as in, "This is gay," what you're doing is equating being homosexual to being stupid, which isn't fair to gay people. What I say to kids is, "I have gay friends, so I personally don't like that word being used in that sense. Could you use another word?" They usually say, "What? You have gay friends? You're gay?" I think some kids think that gay people live off in little colonies and don't interact with anyone. I think that's probably kind of what I thought when I was their age. In fact, I probably said all of these words in these exact ways in any given day as a kid, but as a writer who values words and a believer that our words carry great weight, I try to do the little things to change how these kids talk, or at the very least, get them to think about it.