Officially, gray is the US spelling, and grey is the British spelling. I used to work at a magazine and had to look it up to prove it to one of the other writers before. All of the style guides I consulted were in agreement.
ROFL!!! I had this dilemma when helping DS with his homework a few weeks ago. I finally got out the dictionary and GRAY had the whole definition listed(the color, ie the skies are gray, etc...) and GREY said a variation of gray. So, I came to the conclusion either is correct.