I used gypsy because it's the title the person I was describing used. It's how they asked to be referred to, and as it's their literal blood heritage, I'm going to refer to them however they want to be referred to.
This happens today with words like "transsexual" - there are people very offended by that phrase and there are people who self-label using that phrase and want to be called that.
If we as a species are going to continue down a path of globalization where we have a lot of different cultures and communities around us, we're going to have to understand a word is not verboten universally. There's a difference between someone not wanting to be called retarded and taking offense anytime the word itself is used - even in non-derogatory contexts.