I've killed a sim on purpose twice, with fire, in my simming life. Once was in TS2, and once in TS3. The screaming was so unnerving, that I've never done it again. It was particularly bad in TS3.
I've "punished" a sim in TS2, a particular father who would often shove his daughter away when she would run to hug him at the mailbox when he got home from work and make her upset. I used to make one of his fears come true as punishment for being mean to his little girl.
In TS3 I mainly let my sims interact and whatnot as they please. I like the game to have things like divorce, cheating, slapping, fighting, negative interactions and whatever else, for my stories, and my sims everyday lives, but I see no reason to purposely torture sims unnecessarily and just for the fun of it. I know it's just a game, and the sims are just pixels, but that just isn't me.
