[MENTION=6806492]randrak[/MENTION]
I would say allow them to retrieve the item(s) from the blacksmith, have him raise the guards and chase them out of town (or let them fight legitimate authority). This was player error, translated into character error. Both due to bad bookkeeping (always bad idea), non-involvement (phone) and you (by not handling this behaviour before). Punish any lawful player by turning him neutral if the go through with this. Punish any and all player by moving them one step toward evil if they kill anyone innocent (including guards).
IMPORTANT: warn them in advance that what they are doing is illegal and may have consequences - don't list them, just warn them fairly.
An alignment change sounds a bit heavy handed for a single robbery. Alignment is supposed to be trend, instead of a case by case thing, so changing alignment every time the PC does something lawful or unlawful sounds like a bit much, and would probably be a bit annoying to keep track of. YMMV of course.
Also, I don't know if you read this. The guy who sold the armor was the Ranger. The phone guy was the sorcerer. The two are separate, and this was not a punishment for the phone guy. The only reason he mentioned the story of the phone guy was because the phone guy, who had the least investment, was complaining the most.