Because that might as well be a death sentence. The ship's power would eventually fail, and there's no guarantee anyone would find them (and would you want them to?). Kirk's decision was logical. Give them a new start on some remote backwater and let them see what they can do. Also, let's not forget it was Khan's choice, not a sentence.
Exactly. Putting them back "in the freezer" would have been ruthless and inhumane under the circumstances. Kirk had no reason to suspect that this act of mercy would come back to bite him decades later.