Why does it matter if someone says "That's so gay" to someone else? Maybe those two people are buddies and talk to each other like that all the time. Maybe they have friends who are gay. Maybe they are totally accepting of the LGBT community. Maybe you were the only person who heard them say it. But maybe someone struggling with their sexual identity heard it, and that comment hit them hard.
What can you do? Say something. It shouldn't be acceptable for people to say "That's so gay," so don't let it be. Say they're talking about a t.v. show... You can approach it in different ways - with a joke like "I didn't know t.v. shows could be gay." Or "What, are you in 5th grade? Who says that anymore?" Or just be blunt. At least make them think about what they are saying.
And after, continue the conversation.
It's not easy. It might be awkward. You're not punishing the other person, you're just urging them to chose another word next time. We have to push ourselves to change the social norm, it's not going to happen overnight, but it might happen a little quicker if you and I can stand up for this.
Special thanks to Anya at PARN for talking at my work tonight and getting me back into this.