Disappointed - Ian's Pin Pulled

A little background... At Ian's school in Kindergarden they have a system for punishment. At the front of the classroom there is a sign that looks like a stop light made out of construction paper. Each child has a clothes pin with their name on it. At the beginning of the day each child starts out on green. They get one warning for whatever the bad behavior is (not sitting when they should or talking when they shouldn't or not behaving in line to go wherever, etc...). Then if they continue said bad behavior the pin moves to yellow or red if it's repeated a third time. A red will result in a letter home to the parents and a trip to the principal/admin office.
Well Ian's problem is talking. Not sure where he gets it but he talks all the time. A couple of months ago we had major problems with him going to yellow every day and it was getting old. We weren't sure how to punish and because of that we couldn't be consistent with punishment. So we came up with the following... If his pin gets pulled to yellow he goes straight to bed when he gets home, then he can come down for dinner/homework but after that it's right to bed. If his pin gets pulled to red it's straight to bed for that night and no TV or games for the rest of the week. After a few trips to bed it worked for several weeks no pins at all.
Now the last two weeks he's gotten a yellow pulled, not each day but once each week. So we were all excited when he'd made it through Thursday without any pins pulled. So imagine how disappointed I was when I stopped by the classroom and saw his pin on Yellow. I knew it was coming too because when I pulled in the lot his class was on the playground and he wouldn't wave hello. Ugh, so he's up in bed early on a Friday night.
Once I got a card to pick him up, I went out and was talking with his daycare teacher and she said he's been upset all afternoon. So I told her the reason was because of the pin and because he knew he would be going right to bed. She congratulated me on paying attention to the stop light. She said that amazingly there are a lot of parents that don't even check. So for those reading this far, do you pay attention and do you continue with a punishment at home? I'd just like to know because sometimes I think we're being to tough and then other times I'm pretty sure we are doing the right thing.