There are arguments that defend Bombadil - you will find some of them here on the downs. But I have to admit I can't bear him. It is the "poetry" - if you can dignify it by the title.
I certainly don't think he is "retarded" (which you should be aware is considered an offensive term in the UK though I understand it isn't so in the US)... just too different. I think Tolkien says in the Letters he is a sort of nature spirit. His lack of interest in the Ring perhaps suggests that he is a different type of being to Sauron and Gandalf. And to elves and mortals come to that. He has no need of it, he has all the power he needs and he may not be able to grasp it's importance. His mind works differently, he has a different perspective and priorities.
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“But Finrod walks with Finarfin his father beneath the trees in Eldamar.”
Christopher Tolkien, Requiescat in pace
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