How many times have you enjoyed reading a story where Karma catches up to the bad guy? You smile and say to yourself, "I wish (add your own nemesis here) would get what's coming to him/her."
Wish no longer, give them what they deserve. Write them into your book. It's the perfect writer's revenge. You can enjoy the long-awaited payback, cause embarrassment, pain, and even death, in the privacy of your home with no repercussions. Whether you use a short story or a novel, I guarantee the satisfaction will be awesome. I've taken care of a few people that way and they never knew what hit them. You needn't make the identity of the person obvious, if you're concerned about that. The fact that you know their identity is all that's necessary.
On the other hand, you might want the connection to be fairly clear. I'm pretty sure one of my targets of retribution will never read my book, but if they do, I know they'll recognize themselves immediately. That thought makes me want to purr.
Maybe you think I'm being unduly cruel. Too bad. I'm the writer. It's my book. And, payback is a bitch!
If you want to read more about my revenge tactics, check out my post on www.mostlymystery.com called "This Writer's Revenge".