Why did Cutter retell the sailor story?

As you say, he told the original story about the sailor to Angier to comfort him after his wife had drowned during the show, in a box very similar to that used by Angier in The Real Teleported Man 'trick'.

It is my interpretation that Cutter was disgusted with the lengths that Angier has gone to prove he was the better magician. It is possible (but in my opinion not certain) that Angier had deliberately framed Borden for his murder - a thought that also probably occurred to Cutter. (Deliberately or not, the secret of how Angier was performing the trick prevented him from ever revealing to the police that Borden was innocent. His secret would be revealed and he would probably have been tried for murder himself.)

Cutter understands now how Angier performed the trick and that 'copies' of him have been drowning every night, copies that are to all intents and purposes Angier himself. Cutter just wanted to tell Angier that he has been dying every night in agony.

I agree with the others, that its about causing Angier pain because of the disgust he feels, but there is perhaps a deeper meaning that relates to the theme of the whole film.

The story of a sailor drowning and feeling like he's going home is in a sense the idea that to die doing the thing you dedicate your life too wouldn't even hurt, it would feel like the completion of your life's work.

A sailor drowning feels like he's going home.

A magician dying doing a trick is completing his final flourish.

But after this whole chase for perfection, to create the best trick possible, Cutter is reminding Angier that in the end, he has destroyed himself. That contrary to his delusions of grandeur, to die at the hand of the thing you love is not noble, its still just agony. He hasn't won anything, he's only succeeded in killing the self he used to be.

My interpretation of this was that at the end of the movie Cutter was so disgusted with Angier that he wanted him to suffer. He allowed Borden to gain access to the theater, he knew Borden was going to shoot Angier, and as Angier lay dying he wanted Angier's last thoughts to be about the horrible death his wife endured. You really can't hurt a man more than to let him know his love suffered an agonizing death, and at the hands of the same person who just shot him. There's no one left to seek justice, and neither death will ever be avenged.

Answer is actually simple. You asked why Angier looked shocked. At point of the movie the TESLA transported man works. Basically Angier committed suicide by falling into a tank and drowning. This was obviously conceived by Angier probably to prevent two Angiers from existing at the same time. And he chose to drown because Cutter told him that it was like "going home". Angier is shocked because now that he knows it agonizing, he just realized his "deaths" really sucked.