| Most likely Sasuke was left alive as a safeguard for Konoha.
We already know the Uchiha had the ability to suppress the Kyuubi chakra and it may have even been their task to protect Konoha from it. You can see on the cover spread of the latest chapter the Kyuubi is wrapped in chains and has a sharingan eye.
I'd say what happened was the Uchiha realized how much leverage they really had over Konoha because of this, and eventually tried to use this to gain greater power, or possibly even take over the village. Likely this ended up in the Kyuubi summoning, but they failed because of the 4th.
Whether they knew the Uchiha were behind this or not, I don't know, but for whatever reason the clan was spared for some years after that. Then perhaps they decided it was too dangerous to leave them alive in case the Kyuubi was ever released, so they were wiped out - with the exception of Sasuke.
Keeping Sasuke alive allows Konoha to have a safeguard in case something ever goes wrong and the Kyuubi breaks free of Naruto or Naruto becomes the Kyuubi. This will probably end up being why they were placed together at the start of the series, and why after becoming a rogue ninja Konoha does not allow Sasuke to be killed like missing-nin are supposed to be. They need him.
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