In at least one of the various scripts (or treatments) I've seen, Gaff resents Deckard, believing that he should be given this particular replicant slaying job himself. Predisposed to dislike Deckard as he is, he criticises Deckard for not being able to understand and chooses not to make it easy for Deckard, and further insults him directly in Cityspeak.

Maybe to challenge Deckard. Deckard refuses to play by Gaff's rules (street rules) then, but by the end of the film Gaff does speak English with him ("Too bad she won't live!").

In Blade Runner 2049, I don't recall cityspeak being used at all, and the scene with Gaff being interviewed by the new Blade Runner is entirely in English.

If the lack of cityspeak in 2049 is intentional, that by itself is interesting. Language phenomena do evaporate overnight from time to time.

On at least one occasion, the CC says a person is speaking in city speak, but the language is a Semitic language, probably Amhara.

I think they're both fucking with each other, and they both know it. It's the equivalent of a black guy pointedly using street slang with a white guy he doesn't like.

The sushi chef is the only one who doesn't realize exactly what's going on. Or maybe he does and he's playing along to have some fun at both their expenses.

(Come to think, the chef is doing the same thing, isn't he? He can make himself understood in English when he wants to--"He say you under arrest, Mr. Deckard"--but he does business in Japanese, even when the customer is speaking English.)

You're exactly right. Gaf and Deckard are fucking with each other, the chef is doing his thing and mediating as those in the service industry often do.