I actually remove students from sparring if they can't keep their hands up and protect their heads. We also train how to block strikes that come to the head and how to properly address and defend against kicks. I'm actually surprised that with all of the kicking that TKD does that they spar with their hands down. The kicks to the head in karate doesn't seem to be as bad as it is with TKD. I just think that maybe some of the Karate kids and adults pick up bad habits from TKD and point sparring.
The not guarding the head business comes from the lack of punches to the head. When you can kick and punch to the body but only kick to the head, it tends to make more sense to focus on guarding the body, and dodge or bring your hands up once you see a head shot coming.
Edit: I understand why this is a problem from a self-defense perspective, I'm discussing the sport strategy here.