Don’t cancel the summit at this time. Let Putin go ahead and spend all the money and effort in preparation.
Then . . .
. . . just don’t show up.
I like the way you think. 
The Sochi 2014 Winter Paralympics are going on as scheduled. The US is participating but the official (government gladhanding) delegation will not attend.
Smoke and mirrors hide the reality the West’s response is meaningless.
Shit, most people will consider that a bonus, not a penalty.
As for the G8 Summit, I’m sure Putin can arrange his own hookers & coke, if he is so inclined.