What is the proper manner in which to respond to the question, what salary are looking for?

Hopefully you have done your research before hand and know what the going salary for the position is and what you expect to make. Your answer also depends on where you are in the interviewing process.
If this is an initial inquiry, give them a range and indicate that this is negotiable pending further discussion. If you are dead set on getting a certain salary no matter what, then go ahead and tell them what it is.
Of course, remember, you can't turn down a job offer you don't have. When further into the interview process indicate that you are aware of the going rate and that you are looking in that range. If you really want the job, again, tell them this is negotiable based on other benefits, incentives, etc.