I agree with Samurai_lincoln. Your reasoning is weak, indianboy, but, worse than that, it is useless because you come to no conclusion beyond condemnation. Most people, regardless of how they have been "socialized," could probably appreciate the complexity of this "simple", allegedly cut-and-dry situation. For one, cheating usually at least connotes an intention to undermine the spirit of certain established rules, and yet this fellow has found himself in a "quandry" (at least we know you weren't referencing a thesaurus, or else you might have spelled it 'quandary') through no true fault of his own: the sample test was distributed by the teacher, and no teacher would ever knowingly distribute questions that he somehow later expected to be able to use in a closed examination. So what gives? Did the teacher make a mistake, or should he have known better?
Well, the teacher probably made a practical mistake by assuming the questions would not be in circulation AND by not saying anything about study material from previous semesters (if he failed to say it). But I'll agree with indianboy, insofar as I would personally consider it cheating if the students in question had access to previous material to which no one else had access through the means established by the instructor -- again, though, without an established rule against using previous material, it's difficult to describe his action as intentional cheating (after all, he was just looking to study the material for the next test, not to gain any unfair advantage on the test itself).
From an objective point of view, the teacher clearly has an interest in testing all of the students equally and fairly -- so regardless of his or her intentions prior to the test, anyone who found him or herself in a situation where they had an unfair advantage during the test ought to notify the teacher. Now the crux of the argument for or against describing the action as cheating hinges on whether the teacher said anything about using material from previous classes or whether an existing honor code says anything about using the material OR their conduct given the existing circumstances after the fact. Like the OP said, it's going to seem suspicious when the teacher has two great grades from the friends that sat together -- might as well rescue the good faith they might have with the prof. by approaching him first. The situation seems complex enough anyways that it wouldn't be a very open-and-shut Honor Court/University Court case, if the professor is crazy and tries to take action against them. Personally though, I think he ought to be impressed by the honesty of students who came forward in such away ... he definitely wouldn't be impressed though if the students find out he had somehow warned them not to use old material, and they hadn't listened. In that case, y'all are screwed -- if there is some kind of Univ. Court system in place though, it's fair to say they might go easier on you if you had approached the teacher yourself and plead ignorance.
anyways, indianboy -- thank your lucky stars you've settled on MD instead of JD. Law sounds like it'd be a tough field for you, not least of all because badgering isn't usually tolerated in the court room.