I generally don't hold grudges. Simply put, if someone does something that bothers me, I will work around their bad behavior, but I will not "shun" or punish someone. For instance, if someone takes something I tell them in confidence and tells other people, I will have words with them, and afterward I will simply not tell them confidential information anymore. I will usually tell them that this is what will happen, so they know why and have a chance to modify their behavior.
One friend lost $15,000 that I invested in his business because he tried to get away with not paying his workmans' comp. Rather than tell me that the business was in trouble (or anyone else who invested), he tried to cut the wrong corners. I usually see him at the local pool hall whenever I visit Moscow, Idaho. I flip him shit every time just so he remembers (okay, maybe a little punishment), but I will play pool with him and hold a conversation. I don't dislike him. But when he started hinting around that he was looking for money for another business idea, I told him he needed to pay me back the first $15 grand before I was willing to give him any more.
Some times people bad mouth me. I say go right ahead. I won't hold a grudge. I probably won't hang out with them, because I don't want to be around people capriciously denigrating me (it's not good for my mental well being). And I won't punish or bad mouth them because of their behavior, though I might mention they badmouthed me. If they have other skills or good qualities, I have no problem with telling people that. Ultimately, people will see their character flaws for what they are without me being nasty.
I should point out that this is all my ideal. I've been known to be snarky. I've been known to retaliate. I've been known to get really pissy about things at times. However, more than not I am pretty accepting of people's defects of character.
On the other hand, when I am the person who has sinned, I fully expect retaliation and punishment. Just because I follow a different path doesn't mean that someone else must. In fact, I expect and view it as correct that I should have to work my way back into a position of trust. If I have messed you over, the (objective) odds are that I will do it again. People don't change overnight, and if people think my behavior won't change overnight either, they are betting on the house. So watch me. But if you decide to cut me some slack, I'll certainly appreciate the gesture.