okay... every reason given before this about morals, feelings, and everything else about how it is disgusting or 'too evil' is outright wrong.
the only reason Killing Kids is not in games is because several countries (germany is one off the top of my head) which will out and out ban a game from sales with in its boarders if it has the capability to kill children in it.
being banned in a country means you can't get money from players in that country. and well, game design companies are there to Make money after all... so they follow the rules so they can get the cash money.
hell in a lot of games, Fable, Fallout3, oblivion, making kids invunrable is More of a hastle than simply allowing them to die, which is why a lot of open world games simply don't have kids in them. (GTA3 and on, for example)