yeah this question was bugging me ever since the first episode...
hmm.. keeping it inside a little baby so they can use it later to save konoha? well.. that could be true since theres no other logical reason for not killing kyuubi with him...
but i think theres more to it... now i know this is crazy (maybe kinda n00bish, too) but u think its a coincidence that naruto looks like the 4th (no im not say he is his son, the 4th dies instantly, giving him no time to 'spread his seed').. so i thought about it for a while, and heres my crazy theory : the 4th somehow got reincarnated (maybe its his will).. naruto looks like the 4th, and he wants to become a hokage (the 4th was a hokage) i know it sounds kinda stupid, but hey, freedom of speach, right?