I have never had a spanking when growing up. I sure as hell have been yelled at and that did the trick.
It sounds like the kids parents don't have a firm grasp on parenting yet. Kids need habit, like going to sleep early and punishment should never go above giving them a timeout and sending them to the corner.
If you have patience, the childs behavior will go away.
When they do something bad, send them to the corner and tell them why. If they move away, send them back... and again and again and again...
As seen on SuperNanny, this could take hours, but at the end of the tunnel the kid gives up and usually appologizes for their behavior and beg to be let out of the corner. A non-violent solution and time to spent well afterwards when they actually start listening.
Don't forget to reward for good behavior.
This might work on the parents as well.