Man, I have wrestled with this a lot, too.
I feel best if I say "hi" and then, if they pursue me and I'm not interested, I say "thanks but we're not a match".
But I rarely do that ('cause it's hard to do). More often I just ignore the ones who I'm not interested in. That doesn't really feel so good, though.
The worst is when you continue to have a conversation with somebody who you are not interested in, 'cause then you know you're gonna look like a jerk when you eventually ignore them.
From the other side, I have to say it works pretty much the same way for me: The best is for somebody to politely say "thanks, but no thanks" and the second best is for them to ignore me. At least "thanks but no thanks" saves me all the wondering and hoping and anxiety about whether to keep sending them messages.
It's really hard to type a rejection, even though I do it respectfully, but once I've sent it, I feel really good about it. Once or twice I've experienced guys reacting badly (they send nasty messages back) but I have no problem ignoring that kind of response, since I've been polite to them in the first place, and I have every right to my preferences. We all get rejected.
But the very worst part about Grindr is how addictive it is ... I actually had to quit 'cold turkey' and delete it because I couldn't stop myself from Grinding while driving. That's bad - really bad.