The Prince does not say some should be pardoned and some punished; he says, "Some shall be pardoned and some punished." This is an important distinction. Should implies a moral imperative; shall simply asserts what will happen in the future. The Prince does not issue a sentence against any of the parties. After hearing the situation from Friar Lawrence, he absolves him of any guilt in the matter by saying, "We still have known thee for a holy man." With that, he moves on to question Romeo's attendant, Balthasar, and County Paris's Page. Since Paris was murdered by Romeo, no one can be punished for that crime. Since Romeo and Juliet each committed suicide, no one can be punished by law for their deaths.
The Prince then calls forth Montague and Capulet, "these enemies." He says, "See what a scourge is laid upon your hate." He means that the punishment for their feud lies before them in the form of their dead children. But he doesn't stop there. He notes that he didn't do enough to correct the ongoing hostility between the two clans, and thus he is also responsible. For that, he has "lost a brace of kinsmen." He declares, "All are punished." The "all" referred to includes the extended families of the Montagues and Capulets as well as himself.
The Prince pardons Friar Lawrence for his role in the deaths. He does not intend to punish anyone. The deaths that have already occurred are punishment enough for the Montagues, the Capulets, and the Prince. Readers and/or viewers of the play must decide if they agree with the Prince's verdict. Many might believe that Friar Lawrence showed a distinct lack of wisdom in how he counseled the two infatuated lovers. Yet how does a Prince punish such a "crime"? The natural consequences that will flow in terms of his own remorse and his reputation will be severe. Capulet was verbally abusive toward Juliet, which isn't a crime the government—then or now—punishes. The natural consequence for treating her that way was losing her. The "crimes" committed by those who are still alive at the end of the play are not the types of crimes that can be punished by government, but, as the Prince declares, "all are punished."