Thank you to some play testing this weekend with the Snakes Heart Revised Module for Mazes & Perils by +William Pfaff .
He found that the sleep spell was missing somethings in its description and with out those things, it turns a level 1 spell into a kill machine for munchkins to go wild with!
So here is some official errata on the spell (new in bold/italics):
Duration: 5 rounds/Level
A sleep spell affects 2d8 creatures (friend or foe) of up to 1+1HD, 2d6 creatures of up to 2+1HD, 1d6 creatures of up to 3+1HD, or 1 creature of up to 4+1HD. The spell targets only those creatures determined by the dice, leaving any additional creatures in the area unaffected.Victims do not get a Save vs. Spells. Undead are immune. All creatures to be affected by the sleep spell must be within a 3" diameter circle from the center of placement and caster must have a line of sight, thus the caster can not cast this spell from behind a closed door or a wall into a room he can not see into. Sleeping creatures can be killed by using "Coupe de grace" rules at a rate of 1 per round. Creatures who are coming out of the spell or "waking" take 1 round to wake up before they can act. Please note: Coupe de grace rules do not apply for player characters vs Player Character (or NPC vs Player as well), damage must be rolled out at x2 the rate or double damage rules apply since the time can be taken to make a precise strike.