I've just never heard it used to actually refer to a disabled person, and I wouldn't be surprised if many young people who use it have no idea that it also means that. Kinda like moron or stupid.When you marry someone with a masters in disability studies things you considered no big deal suddenly become things you should think a little more carefully about. Honestly, I didn't use it all that often before and it has been easily replaced by "sucks" or a general gurgling noise followed by "blergh."
When you say "retarded" people know what it actually means.