How do you respond to the greeting " What's up?"

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As a greeting, it's not really a question that expects a direct answer.  I just treat it as a very informal 'hello' or 'hi there'.

If it is used in a context where it is not a greeting, it then becomes a direct question, equivalent to "what's the matter?", or "what's going on?"

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I just say "Hey!" or "Nothing"... :)

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If that is my wife, I would say "Something in my pants is up. Come on, darling!"  :-)
  It' a joke!

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There are 2 meanings for what's up.
One is a greeting.When u happen to meet a friend some day,u can say what's up .
The other is used when u r concerning abt ur friend, u'd say what's up, the same as what's going on.
Hope it wl be useful to you.

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you just say "Not much."

but if not a greeting, "what's up" is a question that someone worried about you might ask.
ex. if your friend realizes that you are feling a bit down he/she might ask "what's up?" = "what's the matter/problem?"

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