As most naval experts expected, South Korea has confirmed that a North Korean torpedo sank the South Korean corvette Cheonan (and killed 46 of its crew) two months ago. North Korea denies any culpability, but the evidence against North Korea is pretty overwhelming. Once the entire ship (which broke in two after the explosion) was recovered, it was only a matter of time before the cause of the sinking was determined.
On April 15th the aft part of the warship Cheonan was recovered, and returned to land for closer examination. The international (America, Britain, Sweden and Australia sent shipwreck experts) investigation team needed about a month to thoroughly examine the wreckage and conclude what, and who, destroyed the ship. The 74 technical experts put the Cheonan back together, just as aircraft crash investigators do, and it was pretty clear that the ship had been hit by a torpedo. That was confirmed by the discovery of torpedo fragments (like the torpedo propeller and parts of the torpedo engine, all located at the rear of the torpedo, and most likely to survive). South Korea had captured North Korean torpedoes in the last decade, and was able to match the torpedo fragments found in and around the Cheonan, with those found in disassembled North Korean torpedoes. Some of the torpedo parts found near the Cheonan also had identical Korean alphabet notations on them (compared to the captured torpedo.) The surviving South Korean sailors were also interviewed, and their recollections were consistent with a torpedo explosion.
Many South Koreans are now calling for something to be done. But there's no easy way to respond to the North Korean attack. Partly this is due to the fact that the South Korean capital is so close to the North Korean border. American and South Korean military planners believe that, if North Korea were to declare war (as they have been threatening to do for over half a century), the main threat would be the bombardment of Seoul, the capital, and largest city, of South Korea. Some North Korean artillery can reach Seoul, as can nearly all the thousands of rockets and missiles. Damage would be in the tens of billions of dollars, and the casualties in the tens of thousands (or more, if chemical weapons are used.) But because of the shortages, and lack of training, the North Korean troops would be unable to advance far into South Korea. And the South Koreans have plans for using their better trained and equipped forces to try and halt the bombardment, and advance into North Korea as well. But that does not prevent the massive damage in Seoul.
This threat against Seoul has long tempered South Korean desire to retaliate against yet another North Korean atrocity (the Cheonan is not the first). More sanctions won't do much, because North Korea is already under maximum sanctions because of its nuclear weapons and ballistic missiles programs. Most foreign aid to North Korea has been halted, because the government there refused to stop stealing the aid (and giving it to the army, or selling it to raise cash). The South Koreans can't do much except hope for a collapse of the police state up north sooner, rather than later. Any strong response to North Korea risks a major response, a form of Russian Roulette most South Koreans prefer to avoid.