I would talk to the teachers. Were they asking him to use his words so that they could understand the reason he was upset? SO much is determined by tone that it really makes a difference HOW the teacher said what she did.
FWIW - I would be more worried about the other kid who is "giving him a hard time." You need to get that stopped, especially if it happened in summer camp and is now happening in preschool. Definitely talk to the teachers about that and see what you can do. That is something that could continue indefinitely and turn into outright bullying as the kids get older.
Don't worry about the crying - he is 3.5. It is perfectly developmentally appropriate.
