Can you help settle an argument between a husband and wife?

OK, here is the situation and the question: A husband and wife go out to a bar/restaurant for dinner and drinks with a group of the husband’s friends that he works with and their wives. The friends are mainly married couples with a few single male friends also. Everybody is drinking but nobody is drunk, just feeling good. The group is a little rowdy and some of the conversation is adult and explicit but generally not directed at any one person. Some good natured busting is also going on. At one point in the conversation, one of the single guys jokingly makes a comment about possibly having sex with a woman that everyone in the group knows but dislikes. At this point, the wife of the husband mentioned at the beginning of the story says to the single guy “If you’re that desperate to have sex, I’ll have sex with you before I’d let you have sex with her.” The group howled when they heard her remark and the single guy put his hands over the husband's ears as if to say “We can’t let him hear this.” Up until this point, any sex talk was confined to each couple’s relationship and the husband became upset with his wife’s remark that was directed at someone other than himself, but did not show it or speak to his wife until after they were alone. After this a big argument followed. ******The wife’s argument is as follows: She doesn’t understand why he is upset. She told him the comment was only a joke and everyone understood it was not serious. She thinks he is blowing this all out of proportion and he is being irrational. She told him he is only upset because of his insecurities and that he had no reason to worry, that she would never cheat on him and he is the only one she wants. She also told him that she believes his friends either don’t like her or don’t know her well enough to like her and she was only trying to fit in and show she was not stuck up or shied away from sexy conversation. ******The husband’s argument is as follows: He says that this is not the first time the wife has made comments like this to other guy friends of his, in fact it has happened many times in the past. Each time it has happened, he has told her he was upset and usually a fight between them follows. He feels that her making comments like this makes him uncomfortable and makes him look foolish in front of his friends. He understands that even though she wasn’t serious, someone might think there was more to the remark than meets the eye, like she wasn’t getting “what she needs at home.” In fact the single guy that the wife made the comment to told the husband some time ago that if the wife was not married to him, he would like to have sex with her. The husband told his wife this prior to this dinner party. In general he just feels that a person in a committed relationship should not make comments to another man like this and that even if it is irrational, the wife should not do anything that hurts her husband’s feelings. The question is: Do you agree with the Wife or with the Husband? (Comments are welcome also.)