"what's up?" means something between "How are you?" and "what's going on?" So you can say "Not much, how about you?" or "Fine, and you?" It is just a kind of greeting. Sometimes it might be that the other person thinks you have a problem ,but it would depend on the tone of voice. If the person saw you in some difficulty he might be saying "what's up?" meaning "what's the problem?" In this case you would tell him what your problem is.