The high levels of radiation in FO3 isn't the norm for the series, FO1 and 2 don't have much in the way of radiation, mostly just the Glow in FO1, and a toxic waste dump random encounter in FO2. And, unlike the real world, you don't get cancer or radiation burns like in rl, just a generic radiation poisoning that takes a lot of exposure to effect you even in a minor way. Also, sterilization isn't a problem, as there are many desendants of people who were outside the vaults when the bombs dropped.
Who said you don't get radiation burns, etc.? Radiation in Fallout will quickly kill you, especially when you stay in the vicinity. Try heading, over land, to the Vault near Little Lamplight in Fallout 3... Doesn't take long. Overall, the radiation levels aren't that high in Fallout 3. There are still fairly heavily contaminated areas, as given in the previous example. Most of the radiation is trapped by surface water. I don't know what effects radiation like that would have on people, so I can't say if Fallout 3 pulls that off well; however, it is true that surface water will be heavily contaminated with radiation following an all out nuclear war. I don't know the exact period of time this would last, but it would be at least several human generations or more.
The main point I'm trying to make: They don't tell you exactly what damage the radiation is causing when you walk into the area. Due to the Pipboy, you can monitor approximately how much radiation you are being exposed to, but that doesn't tell you anything else. If it can result in your death, there must be some sort of damage going on.
And: Cancer is something that takes time to develop. In the scope of the game, you aren't exposed to radiation enough before leaving the vault for cancer to develop. Afterward, the game is over before enough time would have passed for cancer to develop. You could sit out in the middle of a pool of water, occassionally treating yourself with rad meds, and see if the you develop cancer. Would probably be a waste of time though, because I doubt the game makers would expect that and waste time to program cancer in. I suppose they could put NPC's in that have cancer, but again wouldn't be beneficial. Besides, how would they know they had cancer? Without appropriate medical facilities and imaging devices, it would be hard to tell unless an autopsy was performed.