I'm in University right now. We have an honor code. I think it generally is pretty well respected, because people know the consequences for cheating. All cases are published (with names omitted) and punishes can be severe - 1 or 2 semesters off usually.
That said, there still is a lot of cheating that takes place - noticeably among the athletes (sorry to any ex-athletes here). While it is annoying to here about people getting B's or A's in one of the few multiple-choice test-based classes here while doing exactly no work, in the grand scheme of things it really isn't that big of a deal.
It would probably never turn someone in for cheating. To me, it is too much like playing God. How will I feel if I turn someone in for cheating? What if they are on the fast track to a good, high-paying job, good life, the American dream, whatever.
They make a mistake and cheat, and I turn them in. They get suspended for 2 semesters, they have to go back home since there is nothing for them to do in the city where the University is. Their girlfriend leaves them, they lose their scholarships, and now there is a huge red mark on their transcript that no employer will look over.
I have caused this person tons of emotional pain and stress and financial and other damage that will have implications for the rest of their lives. This may seem like an extreme example, but I think it would be pretty typical. Getting kicked out of school for a semester or two hurts people, emotionally and financially. Should you turn someone in and do that to someone just because they were cheating? Maybe some here feel fine with doing this to someone, but I personally would not.
Part of the reason I don't mind when others cheat so much is because I really haven't bought into the whole concept of higher education hook, line, and sinker like many have. Maybe this is a juvenile view, but I still think that higher education is mainly signalling to potential employers. Going through the motions and getting your 3.7 and graduating with honors tells them that you are normal, can function in society, and are worthy of getting a job.
When I was younger and (much more) arrogant, I would always think about your average corporate America guy and say, "give me 1 month and I will figure out how to do that job just as well or better than him." I still believe this to an extent. Heck, I am studying economics and am trying to go into finance. These are "reasonably" connected, but I seriously doubt I am going to use any of the knowledge I learned from my classes in the workplace.
The main benefit of college is the social experience, learning how to deal with your teachers, juggling responsibilities while on your own away from home, and so on. The fact that grades exist and have real effects on people is a reality that I don't really like but have to deal with. This is why I enjoy grade inflation, and don't blame people when they cheat - I don't really think it is hurting them.