A non-moral dilemma about cheating, but it brings up some points

I often give two versions of an exam and TELL THE STUDENTS I am doing this so that they don't even try to cheat. I've even had two different classes take the midterm at the same time, same room, every other seat, so the person next to you is in a different course. And I TELL THE STUDENTS that I am doing this.  A colleague of mine says I shouldn't TELL THE STUDENTS. Here are our arguments 1) Don't tell: students cheat a lot and this is a way to catch them. 2) Tell:  Dealing with cheating distracts from our mission of teaching so best to be preventative so it does not happen. Less noble- tell them so that you don't have to deal with the cheating issue. I have heard of the following case at a diff school some years ago and want your take on it: there was one question on the midterm that was different on the two exams- the prof changed the key number, but they were the same question really. The prof was in a hurry for some reason and FORGOT TO TELL THE STUDENTS. You can probably guess what happened next, but not what happened after that One of the students exams had the solution to THE OTHER PROBLEM on it. Clearly cheating. When called in the student said: Since you didn't tell us that they were different exams the cheating claim is unfair! They DID admit their guilt, but they DID NOT have any contrition.  Options for what penalty to go for: 1) A 0 on the exam itself 2) An F in the course 3) A notation on the transcript indicating Failed-because-cheated. I don't know what that notation was at the schol the story took place, but at UMCP its XF. (Side Note- not clear if someone outside of UMCP looks at a transcript and sees an XF they'll know what the means. But the F part makes it look bad.) 4) Expulsion from school. (This might not be the profs call- this may depend on if its a first offense.) The lack of contrition bothers me, though the prof who told me the story said that the student may have said it out of shock- the first thing that came into their mind. I asked the prof how the student was doing in the class and the prof said, CORRECTLY, that that is irrelevant. SO- what penalty would you go for? The professor went for XF. The student, at the hearing, once again said Since you didn't tell us that they were different exams the cheating claim is unfair! The professor told me that he thinks the student was trying to claim it was entrapment, though he had a hard time expressing this coherently. If the student had been a coherent thinker, he probably wouldn't have needed to cheat. He got the equivalent of an XF. But here is my real question: Should we TELL THE STUDENTS that they are different exams (I think yes) or should we NOT tell them so can catch them?