Does the punishment have to be so long?
It is not really a punishment. It is more of a VERY strong warning that we are serious about the language restrictions. The part I will never understand is the server warns you the language is not tolerated. Yet for some odd reason people ignore the warning and intentionally make attempts to circumvent it. It is like telling someone the stove is hot and watching them place their hand on it. In your case Apocalypze you said, "cuz he cant shot for s***". Now the spelling you used says you had already read the warning and were deliberately attempting to circumvent the restriction.
Seven days seems enough time the majority of people decide it is not worth the gag and heed the warning. Trust me the last thing an admin wants to do while playing is to have to constanly say, "Now little Johnny, You know you can't use that language here. Be a good little boy." For those people that ingore the warnings, a 7 day gag seems to help show them the light.
but I never knew why it was there.
Violated's reasons are on the ball (good post). Some of the blocked words are not "bad" words but are just words that get over used. It seems everyone in the age of about 12-17 is an expert on what is and is not gay. At least they proclaim it in every statement, "that shot was gay. BLAH BLAH". You can really tell the age of a player by how often they use that word. I don't really care about that word I just get sick of seeing it OVER and OVER and OVER. It is like being stuck in middle school all over again.
The bottom line is CS is a game. Let's just have an environment that everyone can have fun and enjoy themselves.