I agree that the concept of mental illness has been, as BlueCrust aptly terms it, "watered down."

Here's the standard I would apply: A person might be mentally ill, if, based exclusively on their coping capacity, you wouldn't want this person babysitting for you. (Of course, there are many other reasons you might not want that. And impaired coping capacity can be ascribed to things other than nental illness.) To better put it - if you are someone whom reasonable people would trust to mind their kids, then you are not mentally ill.

Not everyone experiencing angst is mentally ill.