Actually, I think it's important to teach our children that anothers words do not define us, it defines them. Sure, it may hurt, but only if we let it. It is our choice to decide if what someone says about us or to us is hurtful. Whether or not we feel distressed, hurt, belittleled, embarrassed etc is our choice, just as is any verbal response we make back, such as sticks and stones...
Our reaction to unkind words should be to say something nice back to the person being unkind without judging them. Here's a couple of boys you overhear on the playground - which do you prefer, A,B, or C?
Gus: You're a fat poopity head, Bear.
Bear: I know you are but what am I? (trying to be tough, but doesn't feel any better about self with that response)
OR
Gus: You're a fat poopity head, Bear.
Bear: So's your sister. I know cause I slept with her last night. (T!t for tat, ... so to speak.
Still, Bear doesn't feel good inside with this response)
OR
Gus: You're a fat poopity head, Bear.
Bear: Hey, Gus. Good to see ya. By the way, I saw the game you pitched the other day and you were awesome. (Gus and Bear both feel good about themselves. Gus may say something ugly again at some point, but eventually all the guys that hang with Gus start seeing Bear as not so fun to harrass, so they move on to the kid that doesn't know that sticks and stones may break my bones but words can never hurt me.)