I know what you mean, justamom.
I've been the head of my department for a few years now and I've not relished the moments when I've had to let people go either for economic or performance issues. I become close to the people I work with, which is the strength of my managerial skills, but also the weakness, as it makes those moments when you absolutely HAVE to assert some authority all the more difficult.
Don't stress out about it too much. You did the right thing for your business, and that's what you have to look out for, not the lazy employees needs, regardless of how much you like her personally.
And a good point to make for all the GCers who have occasional issues with their managers. Its not easy for us, either. In fact, I personally think being the boss sucks.
