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I think 'casual' may seem like a bad thing or insulting to some hardcore players, but I'm definately a casual player, and I'm not insulted by the term at all. I play less than 2 hours a week generally and for short amounts of time (5 -30 minutes), so 'casual' is totally accurate. Once SSBB is out I'll be 'hardcore' for a while until life refuses to be set aside any longer.
Conversely a lot of casual players think of 'hardcore' as geeks living in their moms basements, so in a stereotyping, somewhat insulting way, but they normally aren't even involved enough in the industry to even know or use the term 'hardcore'.