I completely agree with you. I find it a bit disturbing when people use "retard" as a way to describe themselves/other people. Far too many people use the word out of context in general. I've seen people use it as a joke, but personally I don't find it funny.
I think that some people call themselves a "retard" in a form of self-expression towards themselves. They think they're stupid, dumb, etc, so they use the term, "retard" because that might be what they think it means. It's so sad to see people forget the real definitions of words, and now they're completely changing them. It bothers me because someone who's just messing around or thinking low of themselves refer to themselves as "retarded," when there are actually retarded people who physically and sometimes mentally cannot control their actions. I think it's offensive and disrespectful to people who actually have a retarded illness- they can't help it. They certainly deserve as much respect as anyone else, and I'll bet you won't see them joking about it, either.