Lord Sri Krishna calls Arjuna a hypocrite and a coward because :

In reading the Bhagavad-Gita, many  in Western countries may have felt astonished at the second chapter, wherein Shri Krishna calls Arjuna a hypocrite and a coward because of his refusal to fight, or offer resistance, on account of his adversaries being his friends and relatives, making the plea that non-resistance was the highest ideal of love.

This is a great lesson for us all to learn, that in all matters the two extremes are alike.  

The extreme positive and the extreme negative are always similar.

When the vibrations of light are too slow, we do not see them, nor do we see them when they are too rapid.

So with sound; when very low in pitch, we do not hear it; when very high, we do not hear it either.

Of like nature is the difference between resistance and non-resistance.

One man does not resist because he is weak, lazy, and cannot, not because he will not; the other man knows that he can strike an irresistible blow if he likes; yet he not only does not strike, but blesses his enemies.

The one who from weakness resists not commits a sin, and as such cannot receive any benefit from the non-resistance; while the other would commit a sin by offering resistance.

Buddha gave up his throne and renounced his position, that was true renunciation; but there cannot be any question of renunciation in the case of a beggar who has nothing to renounce.

So we must always be careful about what we really mean when we speak of this non-resistance and ideal love.

We must first take care to understand whether we have the power of resistance or not.

Then, having the power, if we renounce it and do not resist, we are doing a grand act of love; but if we cannot resist, and yet, at the same time, try to deceive ourselves into the belief that we are actuated by motives of the highest love, we are doing the exact opposite.
Arjuna became a coward at the sight of the mighty array against him; his "love" made him forget his duty towards his country and king.

That is why Shri Krishna told him that he was a hypocrite: Thou talkest like a wise man, but thy actions betray thee to be a coward; therefore stand up and fight!