Yes, Sterling's punishment is appropriate. He created bad publicity for the NBA and violated the organization's rules of conduct. He created a negative environment for the team's players and other employees and demonstrated himself as an unsuitable owner. The NBA's punishment is not only legal, but also morally necessary to protect the integrity of the NBA.
Donald Sterling is free to believe whatever he wishes. However in the NBA, where the majority are African American, prejudice based on race should not be allowed to be influential and so making Sterling sell the team is appropriate. Racism would not be tolerated by any other industry and it would be unjust to ignore it in sports.
I believe the NBA is doing absolutely everything in their power to punish him for his racist words and actions over the years. I think they acted quickly and handed down a severe punishment. I don't think they could possibly do any more considering he didn't do anything that was against the law. I think everyone should be impressed with how they handled it.
The problem with this situation is the fact that it is a private industry that wants to maintain standards and he is a representative of that business. The players are mostly black and this might give them an uncomfortable work environment as well as driving away fans. They have every right to force him to sell his stake in the company.
Even though I don't agree with his racism, his conversation was private. The media got there grubby hands on it and now everyone knows his private business. If it isn't going to effect the way he treats the team, then leave him be. If he can hold back his racist comments to the players then he should be left alone because it was a private conversation not meant for the ears of he public. However if his racism spreads to the team and he abuses them verbally with racial slurs, then you take him down.