They are much less acceptable than they used to be.
'Intellectually challenged' is the more common term.
Here in Canada, there was once an organization called something like the Canadian Association for the Mentally Retarded. (Maybe I have that wrong ... they changed their name a couple of decades ago.)
Because one of their main aims was to have the mentally challenged integrated into the communities, and because the phrase 'mentally retarded' seemed degrading, they changed the name to the Canadian Association for Community Living.
This was almost too polite, because it gave really no sense of what the organization was about.
But that shows that here in North America, we too have moved away from use of the word 'retarded.'