I agree with the principle of swift justice. Conflict can easily lead to the failure of an RP, if Alfhedil's disillusionment is any indication. I was in an RP once with a GM who's too timid to make a final decision on who's right and wrong. While the RP continued up till roleplayerguild collapsed, they lost me. What can I say? Eventually, it's either choose me or some guy who's been with him for several iterations of the same RP. Anyway, the point is that the GM's indecision lead to weeks of pain and suffering for everyone.
EDIT: Nobody has to quit. I'm not advocating that. I'm hoping that a good decision could be made on the fly. That is a mark of an effective leader indeed.