Why are we not always isolating the mains supply?
The vast majority of people only get in contact with electricity via an appliance, tool or other device. If you connect the neutral to the earth and earth all the devices a circuit breaker will likely trip if the earth resistance is low enough. If you'd isolate the neutral you would not know unless you touch the neutral or the neutral makes contact with the earth accidentally, in which case you get the shock, not the circuit breaker. The 1st option is still the safer one. 

This is also the reason why in many countries the earth resistance needs to be below a certain value before you get certification. 

The only exception are double insulated appliances and tools which are build in such a way that the enclosure can never become live. These device are not to be earthed in any way because that would again increase the risk of shock if the earth wire would become live through another equipment that would accidentally leak.