Since I don't think most mean any harm, I try to reply as nice as I can. I just say, "well there aren't any official "teacup" designations, some people just say that because they have small Yorkies. Some even say it when theirs are larger! There just isn't any guide for it. I don't mind the term unless breeders are using it to risk the lives of their small females trying for smaller pups." I keep smiling at them cause in most cases, they have just heard the term and are making conversation. Now if it is a breeder saying that her dogs are teacups -- I don't smile much. ;/
(Actually it depends on how much time I have to talk too -- sometimes I just say --Yorkies don't really have a teacup designation and mine are average size. and off I am to whatever I seem to be in a hurry to so often???)
To tell the truth, I think the term is not going away anytime soon, so why not just be nice about it unless some unscrupulous dealer is trying to charge more because they are endangering the lives of small females. I don't even think it would be that bad to actually have the term -- we could say dogs less than 3 pounds are teacups. That might take the wind out of the sails of so many breeders that say theirs are teacups when they are pushing the upper limit of the standard. But it would have to come with the caveat that teacups should NEVER be bred. Cause some sure would try!
I have had people ask if mine are teacups and others say that they have teacups at home much smaller than mine. So it is all in the minds of the individual people now. Any size can be a teacup in their minds.