Ok, so I have this straight friend and once again he has started playing games. The other night I came home and when I got on-line to check my e-mails, he sent me a message. Following the usual questions/answers, he said he wanted to show me something on his webcam (he usually shows me his new guitar, drums, or something musical), so I said ok. When he turned on his webcam, he was naked and hard and asked me what I would do with this penis. I was shocked, so I jokingly said, I would do a lot and he would like it. My friend was laughing and nothing seemed to happen. However since that night, he has avoided me and has not returned my e-mails or messages. Did I do something wrong and do I need to apologize?
Assuming that's all you said, I doubt it. When he's showing you his erection and soliciting a comment, it's hard to imagine much that you could say that would make it your fault.
That being said, he might just be feeling awkward over the experience. Once the amusement (and horniness, unless he's able to get and maintain an erection with no excitement whatsoever) wore off, he might be having second thoughts about it. I'm guessing that maybe he was expecting a different raction from you, or that when it was done he felt differently about it than he thought he would.
I think you and he need to have a talk.
If this is the end of your friendship, then he at least needs to remember it's his issue and not yours. And you need to remember that as well.
If you are going to remain friends, then you need to come to some agreements. For example, you might both agree to never speak of that night again, or at least that it won't happen again (or you might agree that it
will happen again, minus his apparent post-show freakout

).
He might need reassurance that this doesn't make him gay, or at least that being a little queer from time to time isn't so bad.
At the very least, one of you needs to set some boundaries: Either it's
not okay for him to show you his boner and ask provocative questions, or it
is okay for you to answer them. Or if it's
not okay for you to answer, then he needs to make that clear to you.
So, short answer: No, you don't need to apologize unless he's just so screwed up that he's convinced it's your fault, and despite that you still want to maintain a friendship with him.
Otherwise, I think it's just something he needs to deal with.