Why are power supplies almost always made using through hole components? Every computer PSU I've taken apart uses through hole components, though occasionally (not in all cases) surface mount components are found on the bottom. Don't these have to be hand assembled? (before reflow or wave soldering) If so, why are they still doing this, even though labour costs are low in China, it still must cost less for a machine to pick and place SMT stuff... or am I missing something?
Because PSUs use many big lumpy parts that are not SMDable and/or need good mechanical fixing. Also, for minimum cost they like to use single-layer PCBs - TH is a little more amenable to this as parts act as jumpers over tracks. TH parts can be machine-inserted - e.g. http://www.youtube.com/watch?v=eOQ3pZkKX24 (30kparts/hour!)
One last reason that I haven't seen here (And it's likely the most relevant one):
SMD components are too small.
I mean literally. When you're dealing with high voltage, you have to worry about flashover/board creepage distances, which means that the connections for high voltage have to be separated by a certain amount (There are standards for this, which are required to get UL or similar ratings).
With 240V AC, the distance is (off the top of my head) ~.25", which is far larger then even 1206 parts.
This is also the explanation behind the slots cut into the PCB, which you often see under optocouplers/input filter caps. Basically, to pass testing, the separation on the component's leads is not great enough, so they have to actually mill slots the board. This increases the overall path-length between component pins on the PCB.
Lastly, most of the power devices are through hole because through hole packages can dissipate more power than SMT parts. It's much easier and cheaper to mount a TO-220 package to a cheap extruded aluminium heatsink then have a board with very thick copper fabbed that can dissipate the same amount of power from a TO-263 device.
Half the parts are too big or for other reasons can't be re-flowed (power dissipation, etc) and the cost of doing a re-flow run and a hand process run is higher than just doing it all by hand.
You would be amazed how cheap hand soldering is in Asia.
The power dissipation for a component is much higher for TH. They get better airflow from fans also.