Gandalf didn't say that Gollum didn't deserve to die! He said Gollum did deserve to die. However, he told Frodo not to be eager to deal out death in judgement. Death is final, and it's too final for a hobbit like Frodo to deal out. It wasn't Frodo's place to judge people unto death, that's what I think Gandalf was saying.
As for Gollum deserving death...yes, I'd say so. He deserved death many times before the LotR began, and he deserved death many times during the LotR. But not everyone gets what they deserve. Other forces work, rather, and for all that Gollum did, no one punished him as he deserved (not even Faramir). That other force had a job for him to do. Justice was still dealt out in the end, but not the way Frodo would have planned, nor Gandalf foreseen.
He shouldn't be locked up for eternity, regardless his crime. Besides, that wouldn't be possible in that world, would it?
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A young man who wishes to remain a sound atheist cannot be too careful of his reading. - C.S. Lewis
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