I agree that, if you can get them laughing with you and not have everyone laughing at them, you'll all come out the better. But it doesn't always work.

We were in a restaurant (complete with other patrons) and a lady (probably in her early forties) asked the question to which I made a funny remark. She laughed, as did others, then she asked again. Another funny remark, more laughter, and she asked again! After I gently suggested she not ask that question she said "So, you're not going to tell me." (all of this while sitting across from a man I assumed to be her husband). I smiled and said "No."

For some people no amount of subtlety and wit will ever be sufficient.