Whoa, tough question.
I'd have to go with the American on that one. While the idea of Phelps preacing from jail has a certain appeal, where do we draw that line? I have to place freedom of speech above my (non)right not to be offended. Opinions should never be criminal.
However, I don't believe that speech exists in a vacuum. There are and should be social consequences, and in Phelps' case, I consider civil liability a proper one. Intentional infliction of emotional distress is actionable, and that's his whole schtick.