In my defence I'd just gone through the usual lemming-fest that is Upper Ground/Belvedere Road and he wound me up by telling me to "Get off and walk" as I was cycling at 3mph across a toucan crossing Instead I called him several nasty things that probably didn't make his day. And I'm still feeling a bit guilty about it now. 
My best response, is to not bother responding.
Better still, show them that you don't place any value in their words. I just look at them for a moment, then continue on my way.
It undermimes them and sometimes winds them up, because they are often looking for an argument when they tell you how to behave. They get very frustrated when they don't get a response, but they eventually get the message that they are not valued.
I frequentkly practiced this as work when I used to work with a load of ****ers.
What happened was, that whatever they were trying to do to you (annoy you, advise you when they have no idea or whatever) it gets thrown back in their face. They end up on the recieving end. You just watch them wind themselves up.
One trick is to remember the old addage, that when someone is insulting you, it tells you more about them than it does about you.
They will often call you lots of rude names after they have done something stupid. When they do that, they are usually describing themselves.
If you realy want to piss them off, just listen to what they say and calmly agree with them.
