Many people arrive in Arugam Bay after already spending a week or two travelling around the island. Comfortable with having learned a few phrases they are ready to say ayubowan and istuti whenever they get the chance. However, be aware that Arugam Bay and the surrounding area is predominantly Tamil and while they will usually understand Sinhalese, they will probably not offer you the same smile that you have previously received during your trip! So if you want to make friends quickly you will either have to learn some Tamil words or simply speak in English. Here is a useful website for learning some phrases in both languages.
Why would you speak in English? Well, because Arugam Bay also has a large number of Sinhalese businesses, especially towards the southern end of the town. So, unless you are able to tell the difference between a Sinhalese and Tamil person, speaking in English might be the most diplomatic option!