The 'offensive' parts were in a dream sequence where a man imagines a prophet from the desert called Mahound having doubts about his faith - allegorical and all that kind of thing - he imagines his wives (Khadija, Ayesha and all the rest of them in this allegory) as prostitutes in a brothel and other funny shit.
Rushdie, you either like him or you don't. I don't really dig his style, but I can see why some do. There are some interesting things about Satanic Verses, but it didn't float my boat like Midnight's Children and The Moor's Last Sigh. He hasn't really written anything decent since those.
What I think is funny about the 'satanic verses' was the fact that it was Muslims who wrote the narrative regarding it, not non-Muslims. IIRC it comes from Ibn Ishaq's collection of narrations regarding Muhammad. I could understand if the satanic verses were made up by non-Muslims to disparage Islam but like I said, it was Muslims who wrote down the narrative.