<p>The situation is, I have a website where the users get a sub domain. eg: client.mydomain.com. If the client fails to meet certain condition (eg. payment default), I want the above site to be pointing to a different web site. The way we want to do it is by creating a dns record with the appropriate redirection.</p>

<p>I use a win 2003 server, and program in .Net. any inputs on how I can programmatically do this?</p>

<p>I do control the website, however the reason is there are a lot of users (and hence sub domains) and also there is no physical website for (client.mydomain.come), it's like a wordpress/blogger where a user has blog.wordpress.com (and I assume they don't create a new website for each user).</p>

Well, using .Net and a windows 2003 server, you can do this using WMI scripting.
You can find more information on the
DNS WMI classes here
HOWEVER
I strongly recommend that you do not use a Windows server for a public DNS server - for security and performance reasons you are much better off using a linux server running BIND.  In addition, using BIND-dlz (a add on for BIND), you can make BIND use almost any SQL database as a datasource for your DNS records.  As of BIND 9.4, BIND-dlz is included in the core BIND distribution.  More information can be found at
http://bind-dlz.sourceforge.net