She's saying that he's acting like a girl and that she'd prefer not to date a girl. "Ur so Gay" is a tongue-in-cheek way of referring to an effeminate male. As a homosexual male, even one who does not conform to the stereotypes of homosexuals, I find this song hilarious, entertaining, and much more, but certainly not offensive.
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Katy Perry and the media's 'Kiss' of hypocrisy