I have nothing against being happy. In fact, I often order my life in such a way that it will optimize my level of satisfaction and happiness. However, I've noticed over the years that pushing this behavior to its logical conclusion is a path do disaster resulting in the exact opposite of what conventional wisdom would lead us to believe. The ultimate result of radically pursuing happiness is unhappiness, brokenness, and separation from God.
A lot of Biblical characters were not happy. Job was not happy beginning in Job Chapter 1. For the next forty one and a half chapters much misery follows. It isn't until the very end of chapter 42 that we see another glimmer of happiness. Jonah was not happy about having to preach to Nineveh. Hosea loved Gomer, but he sure wasn't happy with her unfaithful behavior. My children were not happy about eating their vegetables when they were younger. Now they are older and not happy about their curfews.
God seems far more interested in our obedience and developing our character than he is in our happiness. Unfortunately, in our individualistic culture we tend to center our lives around ourselves instead of God. At its core, happiness is almost always selfish. God's best for our lives and selfishness are mutually exclusive. Both the greatest commandment (love God) and the second greatest command (love others) are anti-selfish. They are other focused.
So, is happiness wrong or evil? Does God want us to be unhappy? I don't think so. The problem with happiness is making it the end game or goal. When personal happiness becomes the center of our lives, we reap the consequences of being out of alignment with God's best for us. However, if happiness is a byproduct of living our lives in obedience to God and in service to His Kingdom, then we have our cake and eat it to. We risk personal destruction and eternal separation from God if we pursue personal happiness instead of God's purposes for our life. Our ultimate good will come from our ultimate obedience.