Grade school harment?

My son is 7 and has a kid in his cl who first threathened to beat him up at the playground and is now calling him gay. My son had no idea what that word mean, so another kid explained it to him and then two other kids starting chanting gay. My son was mortified and cried when he told me. I fired an e-mail to his teacher whom in turn told the vice principal. They sent the kid to the office and the vice principal addressed all the kids in the clroom about name calling. I told my son to stay away from those kids at all times. I thought that would be the end of it, but it is happening again. I fired up another e-mail to the teacher and waiting to see the result. My thing is, what is the best way to deal with such a thing. My son is nice, happy kid who loves people but I don't want his esteem to go down and start hating school.