Puppy pens are not cruel at all, and a very good idea. Firstly it keeps your pup out of harms way, and secondly it will help you be more relaxed with him. And the more relaxed you are, the better he will be. If you are tense and at the end of your tether all the time he will sense this and play up to it.
I'd say go for it. Just make sure he has enough toys in their to keep him busy.
Also if you buy a puppy pen you can use it both indoors and outdoors. If you just get an outdoor run thats all it ever will be.
If you do get one, don't just put him in their for punishment, treat it the same as his crate.... somewhere safe and fun for him to be, so put him in frequently
before you get to the point of tearing your hair out with him.
Hope this helps, and good luck. Trust me when I say things do get better
