What's confusing people regarding the word "theory" is that, in common speech, it's the equivalent of a scientific hypothesis. That's an educated guess on what might have happened. Once a hypothesis has been proven unable to be falsified, it might become a theory, which is generally accepted as fact, UP UNTIL it's disproven. Natural laws are a step up from this, which are the few things that are absolutely and positively proven to be right under all circumstances.
Anyways, i digress. Yes, i think evolution should be taught, and although i'm a stone cold atheist who finds everything supernatural to be bollocks, i don't think religion class should be abolished either. I was taught both religion and evolution in school, though i'm sticking with science and evolution. What people choose to believe is (or should be) their own business, as long as they have a choice.
HOWEVER, i'm pretty sure that religion and evolution aren't mutually exclusive. There are several religious people in my class, and this school doesn't teach religion at all. We even had a dedicated run of evolution in biology class. The only times where you actually notice this is when controversial topics get discussed (or when they decline alcohol on the base of religion, but that ain't education). If they do disagree with what's been taught, they're hiding it damned well.