The Confederate flag, and I suppose a lot of symbols, means different things to different people. One thing that I think is important to consider in the specific issue of the flag flying on the South Carolina state capital grounds (which I haven't seen discussed very much), is why they started flying it there in the first place. The flag was not always there. In fact, it wasn't flown at the state capital in modern times until 1961, presumably as part of the centennial anniversary of the beginning of the civil war. However, it was also a symbol of southern defiance of the civil rights movement - a "state's rights" opposition to desegregation.
Given this history, I think it's pretty clear that it's time for the flag to come down. I'm not advocating "banning" it, nor do I completely disagree with some who feel the flag represents more than just "team slavery" from the civil war. However, given the history that the flag wasn't even there until 1961 when a burgeoning civil rights movement inspired its addition to the State flag mast, I have to side with those who want it taken down.
Individuals can fly the flag in their own yards if they want. But the state government is there to represent all the people. And if a significant portion of that constituency is offended by its symbolism and history, then it should not be there.