Whom should the prince pardon, and whom should he punish? Why?

I agree with pohnpei397--I don't think the Prince should
punish anyone.  In fact, I'm not sure that in the Prince's last lines ("Go hence to have
more talk of these sad things./  Some shall be pardoned, and some punished") he's
referring to the type of punishment that he would
implement. 

To look at the situation more accurately, we
first need to look at the Prince's role in the play.  After the brawl between the
Montagues and the Capulets that occurs at the opening of the play, the Prince warns, "If
ever you disturb our streets again/ Your lives shall pay the forfeit of the peace." 
This threat, obviously, is one that the Prince is compelled to impose because of the
out-of-control fighting between the two families.  It's the only way, after so many
years--and even generations--of fighting that he feels he can keep more blood from being
shed.  Again, this is the Prince's responsibility given his position in
Verona.

At the end of the play, while Montague and the
Capulets look upon the bodies of their dead children and learn of their relationship
with each other, the Prince observes that "some shall be pardoned, some punished."  I
think the punishment here (specifically, for the Capulets, Montague, and maybe Friar
Laurence) is the guilt that they will experience that accompanies their role in this
tragedy.  Montague and the Capulets, in perpetuating the feud, have driven their
children to tragic ends.  Friar Laurence, though his intentions were good, could have
gone about things differently; as a result, Romeo and Juliet--and others--are
dead.) 

Given the Prince's threats in Act 1, readers might
assume that the Prince is the type of official who uses the threat of punishment more as
a deterrent than as anything else.  Further, it's important to note that even though his
Act 1 threat warned that anyone involved in more fighting would be killed, he only
banished Romeo for killing Tybalt.  (Though we understand this to
be a show of mercy, Romeo sees banishment as more of a punishment, as it prevents him
from being with Juliet.)  Thus, by no means does the Prince take pleasure in punishing
members of either family. As pohnpei397 notes, the deaths of Romeo and Juliet are, in
and of themselves, punishment enough for everyone else involved in the
situation.

Obviously, this is a question that's very
debatable.  Good luck in deciding for yourself!