jesuslynch, saying was is definitely not a good idea. Someone told me their dad was a dentist. I made some witty remark like, “What, he got tired of all those teeth?” and the guy replied, “No, he’s DEAD!”. This was a kid BTW. Not a comfortable situation.
I definitely vote for “late.” Everyone knows what you mean, and it flows into conversation easily. Though, depending on the situation you might not need (or want) to explain. For instance, after my dad died, I got his car. So, now I’m in high school driving a BMW, so people would occaisionaly hassle me (“Hey man, you got money, buy me lunch” or whatever) and I could just say “It was my late father’s” and there would be an instant change of attitude. However, if I’m relating a story about my dad, odds are I’ll just say “One time my dad…”