Why is Don Quixote always belittling Sancho and calling him derogatory names? The true measure of a noble man was not in how he treated his equals,...

There are several reasons why Don Quixote abuses Sancho the way he does.

The first two are related to each other: humor and entertainment. It is funny, in a broad, slapstick fashion, for Don Quixote to abuse Sancho this way. In his study of Don Quixote, Daniel Eisenberg suggests in these two characters Cervantes gives us the two sides of humor: the ridiculous and the ugly, and does so in ridiculous deeds (like attacking windmills)...

There are several reasons why Don Quixote abuses Sancho the way he does.

The first two are related to each other: humor and entertainment. It is funny, in a broad, slapstick fashion, for Don Quixote to abuse Sancho this way. In his study of Don Quixote, Daniel Eisenberg suggests in these two characters Cervantes gives us the two sides of humor: the ridiculous and the ugly, and does so in ridiculous deeds (like attacking windmills) and ridiculous words (abusing Sancho) 

This abuse is also part of the larger inversion of the world. Everything in this novel is turned upside down. The "knight" is crazy, the monsters are not real, etc. As the question pointed out, knights are supposed to treat their squires with respect. Abusing Sancho is part of this inversion of the natural order--it aligns with insanity.

This, in turn, aligns with Cervantes' purpose for this story. Rather than being a straightforward romance of chivalry, it is a parody.

And finally, it is one of the many ways in which Cervantes signals we should look past the surface of things. Go with the surface, and Quixote is crazy and abusive. Look deeper, and he's a hero (and fond of Sancho, perhaps?).