There are two basic possibilities usually given for meaning here
(1) That anger is something that we are commanded to have (that is: be righteously angry) - this is the KJV idea
(2) That anger is merely permitted but should be controlled (as in the NIV and some other translations)
The Greek verb tense here is an imperative - that is - a command. As such, the KJV translation is accurate. However, in Greek the imperative has different shades of meaning depending on the context. One shade of meaning for an imperative is what Dana and Mantey (in
A Manual Grammar of the Greek New Testament) call the "
imperative of permission".
A clear example of this kind of use of the imperative is seen in I Corinthians 7:15: "But if the unbeliever depart,
let him depart". The verb "let him depart" is a permissive imperative. Paul is not commanding the woman to depart, but is giving her permission to do so.
So, the Greek verb itself can be translated either way: as option #1 or #2 above: the translator must decide based upon the context and upon his theology!
I personally think that Paul means here is commanding us to be righteously angry at the sin around