From my understanding, God has given us all free choice, and allows us to take whatever path we wish. For him to smite the sinful would be to put a restriction upon that freedom. Sin has its own consequences, both in the physical world and the spiritual. Sin separates us from God. In the bible, God is the source of blessings, and curses, believe it or not. To sin is to remove yourself from under his protection and blessing. It opens you up to attack from the kingdom of Satan, and can allow curses to come upon you. These are some of the spiritual consequences. In the Old Testament, the Law of Moses was the covenant between God and humankind (specifically the Jews). The Law was based on immediate judgment - hence the stonings and such. In the books of the prophets you can see God's dealing with them through this law. When Jesus came, he instituted the New Covenant (or Testament), which supercedes the Law of Moses. He fulfilled it by paying the blood price, and therefore bought us out from under it. We do not live under the law and its obligations - rather we live under Grace through the sacrifice of Jesus. Although God allows us to suffer the consequences of our sins - both immediate and ongoing, he has held off his judgment until the last day, when everybody who has ever lived shall be brought before his seat of judgment. Through the sacrifice of Jesus, our sins have been removed 'as far from us as the east is from the west'. God says that he remembers our sins no more. In fact, the final judgment is not about sin - it's about faith. John 3 says that those who believe will be saved, while those who do not believe in Jesus are already under God's wrath because they have not believed. The final judgment is about whether your name is written in the Lamb's book of life. There is no actual final punishment for SIN mentioned, even in Revelation. It is actually their rejection of Christ that sends the condemned to hell.

Shabba has provided an excellent answer, but if you want a somewhat different and shorter answer, here is one: because then the sinner would have no chance to repent and God wants us to repent of our sins, even if we have to be given many, many chances to do so. It's a 2 way street, this relationship with God; the rules are there but thankfully, retribution is not instantaneous for disobedience. All humans are imperfect, and no-one would go to heaven if we were smitten at the first sign of sin, thereby spoiling God's plan to share heaven with us.

For the wages of sin is death but the gift of God is eternal life through Jesus Christ our Lord. Romans 6:23