I think this does more to tarnish the reputation of the web designer as an immature, spiteful person, instead of being a true business person. The best way to handle situations like these in my experiences is to take the site offline and say it is due to nonpayment, and provide a means to contact you discreetly. Then send the bill to a collections agency with a 33% markup to cover the collections costs. Most clients are honest, eager to correct what is most often a communication or clerical error.

I've experienced non-payment only a handful of times over 15+ years of freelancing. Barring bankruptcy, I have ALWAYS been paid by using these two tactics. If they go bankrupt, you will be just another creditor, and a low priority one at that, since there are no physical assets involved.