Maybe the werewolf town is accustomed to having do-gooder type adventurers waltz into town, declare the town's unfitness to live and begin indiscriminate lupine slaughter? Maybe they were preemptively attacking the party.
I'd say it's evil to kill them all while they sleep, though. If the PCs think it's a danger... they should leave town- other nearby locals probably know to stay away from the contained were-people zone.
If there's a cleric or paladin who says that "It's part of my holy mandate to eradicate the vile taint of lycanthropy and some such!", then it's about as evil as the crusades.