I recently read an article called "Why I'm a Big Fan of Hell," and despite its potentially revolting title, the author had some good and thought-provoking points.
It goes like this...God created everything, including eternity, correct? (See Acts 17:24) Everything God created is good (1 Timothy 4:4); as the author points out, God knows what He is doing and "to say that I'd do without hell is to suggest that I could do a better job fashioning an eternity than God can." We can't improve upon what God has created. God, being all-knowing and all-powerful knew the necessity of hell. God is holy, therefore, hell is necessary. It actually promotes God's holiness.
A conversation with a friend recently prompted this question: Is it good for sinners to go to hell? After thinking about it, I concluded that yes, it is good, but it would be better it they repented. However, I was quickly corrected in this thought--for whom is it better? The Potter or the clay? The Bible says that our unrighteousness enhances God's holiness (Romans 3:5-7) and the same way, so does hell. [Note: I don't feel like starting a debate about double-predestination, that's why I didn't bring up Romans 9; so sue me ;)]