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A question I have been asked frequently. And one that seems to have no right or wrong answer.
For me, when a child has earned a token for exhibiting "courage" or "compassion" or "respect" (just some of the few items listed on our alternative ways to earn tokens sheet) I do not feel right in taking that token back from them. It feels to me as though the goodness they have created can be nullified if they do not make a good choice in the future. Our family has other means of implementing discipline and I keep it separate from the token system. In my mind, it keep the system associated with freedom and fun.
That being said. Thanks to the parents I know, whom have been successfully implementing the Goody Token System, I have fabulous feedback from them regarding token confiscation. Parents have said that the system works just as well even though they have chosen to take tokens away for misbehaving.
So, there you have it. You will find what works best for your kids and family. You will hone and tailor it over the years to their new interests and responsibilities.