If it's a guy my response would be "I'm not gay." If it was a girl I liked I would leap into her arms and kiss her passionately. Well, I wish I would do that, because it will never happen :P
For someone I don't like I'd say "Thanks for being honest and opening up about this to me but i'm sorry, I don't think our relationship can be a romantic one. Why do you like me anyway?" If they had a good enough reason maybe i'd reconsider, unless they're a)male or b)just too hideous in my opinion. I wouldn't tell them that they're hideous physically or personality wise to the point of incompatibility, just say "I'm not sexually attracted in you". It'd be pretty hard to reach that point though, I can be picky in my head but beggars can't be choosers, if someone professed interest in me I'd take what I could get.