They should after like grade 6 so that the more intelligent are challenged. Before that though should be time to access them. They should also be allowed to go up and down levels over time. It should be controlled by the government so rich parents can't buy their kids a seat in the schools.
Research suggests that highly intelligent students who are not challenged eventually become bored and even disruptive in a learning environment. Leveling schools according to intellectual ability prevents this boredom from setting in by being able to provide a classroom setting that challenges students based on their intellectual abilities and, thus, insures that every student is tested at an appropriate academic level.
Children who are sent to the lower ability classes will feel very discouraged and may perform even less well than they would if they were not leveled in this way. University settings are settings where only the brightest people are in class together, but elementary and high schools should not be divided in this way.