Care to elaborate? Carpet bomb the entire place or just nuke the [censored] out it?
What should the west/NATO do about them?
Kill them.
This isn't a country-vs.-country war. Carpet bombing was primarily a technique developed by the Brits during WWII to try to keep their bomber pilots alive. If you were to try to carpet bomb ISIS, either most of your bombs would fall in uninhabited desert, or worse, fall in civilian areas. Nukes are kind of the ultimate carpet bomb.
As far as how to win against ISIS, I don't know specific techniques, but our military does. Also, I'm hopeful that middle eastern people and governments will rise up against them because of their indiscriminate violence.