Is It Okay for God to Punish People for Sin?

I'm listening to an old sermon by Dr. Jim Grier (the most intelligent man I've ever known). He began by reading from Revelation 21:3:

And I heard a loud voice from the throne saying, "Behold, the dwelling place of God is with man. He will dwell with them, and they will be his people."

Then he said this: "the earth was created to be the dwelling place of God."

You need to take just a minute and let that sink in. Think it through. Consider the ramifications.

Immediately, I began to think about how this informs the way we think about so many things. It should affect our view of ecology, it should affect our view of sustainability, and it should affect our view of sin.

Let me illustrate with a story.

There was a man who constructed his dream house. He poured all his resources into the house, and in the end it was a beautiful creation. The house was designed perfectly for the man and his family. Then he went away on a journey.

Before he left, he hired a caretaker for his house. "You are to represent me in this house," he said, "and when I return, there will be a room for you to live with us."

However, when the man returned, he found his house destroyed. The caretaker had abused the house, using it for his own pleasure and desires. He had ignored the instructions of the owner, and he and his friends had rendered the house uninhabitable for the owner and his family.

So the man destroyed the house, and re-created it. He lived there with his family. But he threw the caretaker out, and had him arrested, and prosecuted him to the full extent the law would allow.

Was the owner justified?

Is God justified?