I believe he killed his family to activate the bloodline limit of the Sharingan and left Sasuke alive as a way to end his suffering. Constant use of the Sharingan results in blindness, and we all know Itachi loves to use it.
I also believe that he joined the Akatsuki is because their leader (still unknown though i believe it is the guy Kyubi spoke of in the first episode of Shippuden) is freakishly strong. Itachi could not find anyone stronger then him in Konoha and sought extremely strong fighters to follow. He never was one to lead a group (though he did lead in the Anbu). Probably because it is easier to follow a plan then to make the plan.