He should be honored to have been offered membership in the Feature Actors Guild.
I've always thought Cruise was a flake, but I never thought he acted gay. Not sure what vibes other people are picking up there- he's always played macho roles and has done a pretty good job (especially in "Collateral"). Reminds me of the "Troy Aikman is gay" rumors a while back- I think some people do tend to get jealous and go to the gay card.
More seriously, losing the suit would be disasterous. It would play into every stereotype (ahem, truth) that scientology is trying to avoid (ahem, cover up). It would publicise the accusations, embue them with a seriousness that they currently lack, and establish that they are not slander.
If he sues, he absolutely must win, and suing a satire which even satirized itself as lawsuit bait, would be hard in enough in a country like Britain. In the ol' US of A, the plaintiff must establish that the defendent KNEW that the claims actually false, not merely baseless. And South Park could very, very easily simply claim that they never said Tom Cruise was gay, they were just making fun of the speculation that he was gay. The character of Cruise never did anything at all gay; all South Park did was feature OTHER PEOPLE telling Tom Cruise to (very literally) "come out of the closet."
The larger question in my mind is whether or not a lawsuit would require him to indeed, "come out of the closet".