Cheating during tests is a big deal. And this is a usual habit of some students.. Unfortunately, the teachers in my class don't see whats happening around them nad this leads to my classmates to copy happily. Its not just bad for the students but its also unfair to the others as it took us to learn a lot and it just takes a peek for them to get good marks.
About the punishments, suspension can be given, as well as a failing mark for that paper and no re-test should be allowed..