J., I really, really feel for you...here you are trying to bring up your child to be polite, respectful and decent and there is the exact behavior you are trying to not expose your family to, living across the street. I totally agree with some of the posts that suggest playdates at your house with your rules, but that doesn't speak to the fact that doing so further exposes you and your son to the horrible life choices those adults have made (using foul language, allowing disrespectful behavior, lack of ambition and general irresponsibility).
I also agree and learned the hard way that you should never say anything to your child about another child that you don't want to say publicly. My daughter was kind enough to tell her friend, who also lived across the street, something negative that I had said! It made living in that neighborhood for the next 4 years pretty miserable.
Instead of making up "busy" excuses, that could possibly end up blowing up in your face, consider killing 2 birds with one stone and really being busy by signing your son up for a bunch of interesting classes that would expose him to kids more like him and you to parents more like you in a nice, neutral environment. Then you can take your time and learn more about their values before jumping into playdates or frienships, and if you don't like someone then, you only have to see them once a week while your son is occupied with the class. Also, take your son to a park farther from your home. And invite other friends over to your house, even if it means you have to drive to get them, and have a 1-friend-over-at-a-time rule. It's going to be tricky, but like someone else said, they'll hopefully get the picture, or at least stop trying. And you shouldn't have to do this for long since your son will be going into Kindergarten soon enough.
Unfortunately, in my experience this will come up again and again in your lives...it's the price of having high standards and morals. Don't ever feel bad about that. Expose your son ONLY to those people/behaviors of which you approve.