If cheaters never prosper, why do people cheat?

Why do people cheat — whether on their spouse, during tests, playing sports or in business? A recent event amongst friends triggered this question in my mind and nagged me for several days about the psychology of cheating. 

The circumstances that prompted these thoughts are not worth reciting, but the motivation of cheating to win $40, $400 or even $4,000 intrigued me enough that I went out and researched why someone would risk such damage to his or her reputation for seemingly so little reward. Some of the stuff I found seemed to be a bit of psycho-babble, but most was illuminating. And many ideas spurred even more questions. 

Are there degrees of cheating? Is it worse to cheat to gain $1 million or is it worse to win a mere pittance through cheating? Is a long-time affair worse cheating than a one-night stand?