I agree that a funeral shouldn’t celebrate the sin, so I go along with the Church. But, that said:
1) All funerals are for sinners, period.
2) We do NOT know where each individual person goes (there are no advance copies of the Book of Life, to my knowledge). We can assume dear Aunt Edna went to Heaven, and can assume limp-wristed cousin Eddie went to the other place, but in reality we don’t know what God did in the last moments of anyone’s life.
Last time I checked, all of us will die if the Lord tarries. We do not know where someone will end up, since G_d determines that. We can only be responsible for ourselves and those few we touch.
Funerals are for closure for the living. I don’t like the theatrics of Mr. Phelps or crass political statements of a Wellstone funeral.