I think your response here has to depend on the venue.

In a night club, "No [edited] Sherlock" would be great.

I like the Santa Claus bit for a family show.

Ted

I use reverse psycoledgy and say something along the lines of: "what, you do magic, this is your show (preformance), do me a trick"

Here's something that might suit some of you (it would generally suit my character fairly well).

Heckler: "There's no such thing as magic."

Performer: "Excuse me. What is your name, sir?"

Heckler: "Gerald" (All hecklers are named Gerald, don't ya know )

Performer: "Everyone! This is Gerald. Apparently he showed up a little bit late to the party..." *Point to your head so as to say, "slow in the brain"*

It gets a laugh, and is adaptable for every type of venue, since it can be done with any kind of tone. With me, it would be a generally polite tone, but if I want to, I can make it incredibly humiliating.

Furthermore, when he gets up in front of the crowd, only to be laughed at, it lets him know that it is your show, and he will not win.

I've never actually had anyone say that while I was doing magic. It blows my mind that someone would really be that stupid. I've seen these idiots making comments on YouTube, but I don't think I've ever actually encountered someone in real life who doesn't understand what a magician or a magic trick is. Maybe this is an extreme and rare type of stupidity.

It should just be common sense that magic is just entertainment, and that you can't really levitate or swallow a quarter and cut it out of your arm.

If anyone ever actually says that sh*t in front of me, I doubt I'll be able to maintain control and I'll probably say something rude and sarcastic.

dumb@ss: Magic isn't real.
Me: You figure that out all by yourself, did ya?

or maybe...

Me: No way! I suppose next you'll be telling me Santa Claus isn't real either.

I usually choose not to spend my time trying to argue with spectators/people saying such statement like "There's no such thing as magic" or any lines related to it.

Normally I will simply tell them "I think so too" and move on with whatever I am doing, this usually gives them no reason to give a comeback.