I was talking to my brother on Instant Messenger earlier this evening, but when I finished, I didn't close the window. And when he went to bed, he left his computer on, and instead of setting an away message, he let his session go idle. And when that happened, a message popped up in the window saying '"Benjy's Brother" has stopped using their computer at 2:19:49, and is now considered idle.' Now, I'm not sure if it was the AIM service that sent that message, or his client that sent the message, or my Mac OS X Beta client which printed the message, but it was definately an automated message and not an away message.
"What's wrong with the message? It's gender neutral and everything!" you might be saying. Well, it's precisely the gender neutrality that's the problem. It's nice that they used the correct "their" (as opposed to there or they're), but it's not nice that "their" wasn't even the right pronoun to use. 'Their' is defined as "The possessive case of the personal pronoun they", and 'They' is defined as "The plural of he, she, or it." In other words, 'Their' is the plural possessive. In other other words, according to AIM, my brother is a plural entity. Which he isn't. Trust me, I've met him.
Why did AIM do this? Because they were trying to be gender neutral, of course. They didn't want to use sexist language, because apparently it's "bad form". It would have been embarressing if it'd said '"Benjy's Brother" has stopped using her...', and while using 'his' in that context is usually the accepted solution to this quandry, AIM chose not to do so.
What would have been a better way to word that message while staying gender neutral? Under normal circumstances, the best way to stay gender neutral is to rephrase what you were saying to be a plural statement from the get-go, instead of trying to wedge gender neutrality onto a non-plural statement. But off the top of my head, I can't think of a better way to handle the AIM case other than "his or her", because this is a complicated automated situation.
update: My roomate Keith offered up '"Chan da Man"'s computer has not responded for x hours and is considered idle.' Ah, very good, thank you Keith.
Most people probably noticed pretty quickly the error in the message, but there's a more insidious case, which is more common than I can shake a stick at. In an attempt to stay gender neutral, people will use 'they' in place of 'he' and 'she', which sounds right, because it's so common, but it isn't. It's also tricky because it happens when you're speaking in the third person. For example, instead of saying "The student asked what he should be doing", you'd see "The student asked what they should be doing". Another example would be "Each student put their coat in the closet."
This comes up when someone wants to make a general statement about a single unspecified entity. When it's a general plural statement, English is armed to the teeth with gender neutrality, and when it's a statement about a specific single entity, the pronouns practically speek themselves. But English isn't prepared to deal with statements about unknown singular entities. A solution? Figure out how to rephrase your statement as a plural statement, because odds are, it'll apply to more than one person, given that there are six billion people out there for it to potentially apply to. Alternatively, make the tradeoff between being awkward (his or her) and being gender neutral. None of these are exactly optimal solutions, as each has it's strong points and week points. Whichever option you pick, trying to use a plural pronoun in place of a singular pronoun, no matter how much you convolute the sentence (even if it's subconscious) to make it work, isn't a solution at all.
This phenomenon is known as hypercorrection. An example of this that's less complicted is the plural of octopus. It looks kind of like a latin derived word -- alumnus, for example. Both alumnus and octopus are singular, and the plural of alumnus is alumni, so the plural of octopus is octopi, right? Well, no, because octopus is a greek derived word, so it's octopuses... But that doesn't stop hypercorrection, and some day octopi might actually become the plural of octopus. And I'm not even going to comment on alumna and alumnae, other than to point out that even if octopus was derived from latin, the plural for a bunch of female octopuses would not be octopusae.