When I open for trades I strictly say "not first come first serve" and let people know to leave their character and if I find their idea interesting I'll note them.

This keeps me from having to actually say "no" to anyone.
If it's someone who just randomly approaches me and the theme or their style isn't something I want in a trade I just tell them I'm not interested in a trade currently.
I've never had someone ask me to draw a theme that has made me uncomfortable but I'd be honest and just say I'm not comfortable drawing their theme.