cjchaps' post has the most logic in it than anyone else's here.
To reiterate what he said, life's not fair - there will be always cheaters, and whining about them won't do you any good. Sure you can rat on some of them but there are going to be others. You can either 1) study even harder to offset part of the advantage they have over you or 2) cheat too.
Don't click that reply button just yet to flame me because you're assuming I'm a cheater. I'm not. I'm currently in high school and I don't need to cheat since my courses are easy enough to do without cheating. Will I cheat in college? If I have to...again, notice that doesn't say I will definitely cheat. I am not going to sit on my ass whining about cheaters while spewing foam at the corner of my mouth...I am not going to let them have that unfair advantage over me so if I have to, I'll cheat myself. Having strict morals may make you a "good" person, but how far will it get you in real life? Definitely not as far as the cheaters. Do you think your morals will be rewarded? Probably not, but that co-worker who just stole your ingenius idea was just promoted over you. All you can do is grin and bear it because life is unfair. The only solution is beat everyone else by whatever means necessarily, even if it involves cheating. Do you think Microsoft, Symantec, IBM, Xerox, etc got thusfar by playing nice? They ripped off intellectual property, reverse engineered competing products, and the list goes on and on. In other words, they are competitive.
To really get anywhere, you have to be competitive as hell - you have to have intelligence, street smarts, right personality, motivation, AND the ability to make things become advantages (i.e. cheat). Sure, those idiots who never studied and passed by cheating will eventually get weeded out. But those dedicated, smart, and ruthless students will get farther than a student who is just as smart and dedicated, but without the ruthlessness. Anybody here wholeheartedly believes Bill Gates got this successful by not cheating?
And once again to those people who are ready to flame me, I don't cheat (but I will if I have to) and I do not condone it. What I'm trying to say is that whether you like it or not, cheating, if you're careful, is inevitable to compete with others because you can almost be sure that your competitions are cheating.