If they tried to keep him there it would kind of spoil the whole thing and tip the lie of their supposed benevolence.
Much better for the PR to let him go and wish him luck. Probably even have a send off ceremony, give him some kind of medal?
Permanent residency is not citizenship. Granting Permanent Residency will give him some sort of stability knowing he will not have to renew his status every year (or so) and be able to participate more fully in Russian society (ex: Employment, services, travel, Pension, etc).
Edward Snowden will always be a US Citizen in the eyes of the USA unless he takes steps to renounce his citizenship.
In fact, if they granted him citizenship, then they might prevent him from traveling because he would become their responsibility in case he gets arrested abroad.