Funny - I just read a chapter on this very topic in Thomas Prehn's book, "Racing Tactics for Cyclists" this morning on the train.

Not panicking is definitely key, also staying loose, elbows bent. Drum your fingers on the bars occasionally on training rides helps drill this. But, overlapping wheels is a fact of pack riding so knowing when to worry about it helps too...on the sides, at the front, and in corners - where someone is likely to make a quick sudden move in an attack.

This happened to me at Spring Prairie last year on the last lap, third corner. Luckily I saw it coming - a dangerous move cutting from the right across a tiny gap all the way to the left - I drifted left with his direction, and although we touched wheels it didn't force me into a sudden new direction. I stayed rubberside down and finished ahead of that rider.

Prehn has some good low speed drills for handling this too.

Dr. Egon Spengler: There's something very important I forgot to tell you.
Dr. Peter Venkman: What?
Dr. Egon Spengler: Don't cross the wheels.
Dr. Peter Venkman: Why?
Dr. Egon Spengler: It would be bad.
Dr. Peter Venkman: I'm fuzzy on the whole good/bad thing. What do you mean, "bad?"
Dr. Egon Spengler: Try to imagine all life as you know it stopping instantaneously and every molecule in your body exploding at the speed of light.
Dr Ray Stantz: Total protonic reversal.
Dr. Peter Venkman: Right. That's bad. Okay. All right. Important safety tip. Thanks, Egon.

Of course, the whole point of bike racing is to overlap wheels at some point, otherwise passing people would involve some sort of hover mechanism (I hear SRAM is working on it). While Pro/1/2s are of course blessed with 360 degree peripheral vision, and any verbal communication is limited to bribery and shady alliances, the rest of us can benefit from a simple uttered word or two.

I'm probably among the more vocal in the field as far as communicating, but it's served me well. When you decide to take advantage of the three centimeters of open space between the rider in front of you and a wall of chicken wire fencing, speaking up with a CALM "right side" can do wonders. In Tennessee... they even say "Please". Crazy, I know. It's like asking permission to punch someone in the nose, but it seems to work. Just don't shout or you'll end up as fodder in the blogosphere.

If you're attempting to pass and get stalled alongside someone's rear skewer, say "Echelon left/right" and pretend it's on purpose. Also, some guys like to take this opportunity to gently tap your buttocks and let you know they're in your blind spot. As far as I can tell, this is a gray area of cycling and is not addressed in the USAC rule book. If this happens to you, stay calm and play it cool. If it happens more than once, however, you might need to hold your line a bit better, or you might have made a new friend.