Chat flags carry an automatic 30 minute suspension if they are declared valid. This is perfectly valid for spam or insults directed at other posters, but flags are not only used in those clear cases.
There are a lot of other things some people find offensive that others don't mind, e.g. mild profanity that is not directed at any user. I personally don't consider a suspension necessary in such cases, just removing the profanity should be sufficient in such cases. There are a lot of cases that are just users with different expectations of what is allowed in chat, I think we should remove things that one can be reasonably offended about if there is a complaint, but we should not necessarily suspend people over that.
As a moderator I can work around these limitations and perform actions in between doing nothing and deletion + suspension, most users only have the two extremes as a choice.
Adding this option would also solve the problem that many users probably don't even know about the automatic suspension and don't take it into account when declaring a flag valid or invalid.
If a third option would be too confusing, I would at least add a notice with the consequences of a valid flag to the dialog, so that the users deciding on the flag know what effects their actions will have.