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djcb comments on Ability to react - Less Wrong
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I most often hear it referred to as "thinking on your feet," which is admittedly not noticeably more felicitous than "ability to react."
If you haven't read Gladwell's Blink, you might find it interesting.
You might also find extemporaneous speaking and improv theatre a useful way to improve at this.
Regarding Gladwell, I think he's a good source of interesting anecdotes, but I'd be very cautious to take his conclusions too far -- he's much more of a Oprah-philosopher than a rationalist thinker.