I have unbanned update222 for reporting revenge13 who have copied codes from the web and submitted them on SPOJ.
The other reason are:
- his high rank - he must have solved something by himself
- time passed since the ban - I hope he won't paste any code from the web anymore
As for Francky, he's just passing the info to admins that someone can be cheating. Then, as he mentioned, admin (e.g. me) checks if the reported user is cheating (by googling parts of his source or checking submissions in similar languages with similar times). When user is banned he's cheating for 95%. These 5% are times when user copies codes from his another account or when users wrote the program together (e.g. during a team competition).
If you want to help finding a cheater, write in which problem he suspect might cheat. It helps a lot. I wouldn't disqualify their solutions - they should be visible so admins know what submissions to check. But it's up to you, of course.