I don't remember ever "punishing" one of my own sims, unless you count making them go to work hungry or work out all night. :) But NPC sims, well they are just basically red shirts, waiting to be either "promoted" to played status or (possibly) bumped off.
Buuut... if a sim I created got to be too annoying, personality wise, I'd just move them out and make them unplayed. I did that not long ago. I have 2 sims who just get on my nerves. I like them but I no longer want to play them. I've sent them off to university as unplayed sims while I decide what to do with them.
That said, in Sims 1 (and probably 2, my memory is fuzzy) I many, many times created sims especially to be killed by my pretend vampire (this was before real vampires, obviously). I would create a box mansion for my pretend vampire, put the Sweetheart Bed (the only bed in Sims 1 they could woo hoo in, at least in the early days) in the garden surrounded by beautiful shrubs, next to a big pool. Then I would create an 8 person family with the last name of Victim or DeadSoon and dump them into an empty lot. My vamp would meet each one, romance her/him, and after a successful woo hoo interaction the Victim would be sent to the pool and I'd remove the ladder. I pretended he had bitten and drained them. I kept their graves in a big cemetery. Often I would give them such imaginative first names as 1, 2, 3, etc. >:)
Two weeks ago I created 2 families for my first ever real Vampire, Ilya Constantine. They are designed to be friends and meals. I don't intend to kill them (unless one of them really, really annoys me.) They all have normal first names, but the 3 person family are the Bone Appetit's, while in the other family we have 4 Cordon Blud's and a sister with the last name of Aperitif.
