While I agree that political correctness can (and often does) go too far, I don't find it as offensive as some of you obviously do. I see it as a mechanism where people are attempting to be sensitive to cultural differences, and remain neutral.
Maybe it's regional. I live in a very mixed-ethnic part of the country (northern VA, very near DC), and you can never assume that someone you meet is Christian, or Jewish, or Muslim, or Atheist, etc. To me, Happy Holidays is the one way where you can wish someone well during the holiday season, and not "get it wrong". (Unless, of course, the person is a Scrooge, who isn't really a shining example of the holiday spirit.)
Personally, I think going out of your way to not offend someone is a sign of a sensitive individual, who wants to respect differences between themself and another person.
I'm an Atheist, but I don't get my panties in a bunch if someone wishes me "Merry Christmas". I'm aware that the sentiment behind the greeting is one of well-wishing, and I take that in stride. I also don't have a problem wishing the other person "Merry Christmas" back, since I know that it means something to them.
What I think is silly is how there are some folks out there who think that Christianity is being "attacked" because some other folks would rather use (and see used) "Happy Holidays", instead of "Merry Christmas". To me, it has less to do with being anti-Christian, and more about being all-inclusive. Of course, I'm the kind of person who doesn't see the whole gay marriage debate as an "attack" on traditional marriage, but rather an opening up of the concept to gays and lesbians, etc. But that's a whole other argument. 
