Putting aside the legality, wouldn't you agree that refusing service to someone on account of their sexual orientation is despicable behavior?
Of course it is, but just because something is despicable does not automatically mean that it should be illegal.
Maybe not automatically, but it certainly weighs in favor of protecting gay people.
I'm just not following the counter argument here. On one hand, there is a tremendous problem for someone who is denied employment, access to housing, civil rights, credit, schooling, etc on account of sexual orientation. On the other hand, what? There's an interest in people having the ability to engage in despicable behavior? I don't understand why that's giving you pause.
I think the argument is basically a traditionally liberal (in the correct sense of the word) one, and it basically boils down to: the government should not interfere in disputes between individual actors (businesses vs customers, for example) that can (supposedly) otherwise be resolved between the actors in question. It is all about individual liberty, freedom of association, and freedom of choice-regardless of the outcome of the choices that are made.
Of course, this is, IMHO, way too much of an idealized abstraction to be used as an effective rule for society, and causes more problems than it is worth, so I hope we can find a better way to address the problem of discrimination against minority groups.