My oldest never hurt my youngest, but there was definitely some "acting out" when #2 came along.
If you give him time outs or take stuff away, he will only remember how mean you were and how bad it felt, and that it was related to his little brother somehow. You want him to stop hitting his brother because he wants to (because he no longer feels he needs to), not because he will get spanked or get his favorite things taken away if he does it.
We watched some home videos the other day, and it was really painful to watch how "mean" we were to my oldest when it came to his behavior around his brother (they were around the age of your boys in this movie).
To me, here was this cute innocent baby, and the big old mean brother would not be nice to him at all, so the mama bear in me came out and I would scold him (on camera, no less ;>). No time outs or spankings, that's not my style, but still, it was unpleasant to watch how little understanding I had about how he felt about the "situation".
Don't make that same mistake. Someone else mentioned the book "Siblings Without Rivalry", that's a good resource. You have to acknowledge that he may be mad about this new addition, but that he can tell you about all his terrible feelings about his brother without you getting mad at HIM or doing mean stuff to him. Remember you were (are) his world, and now he has to share you. It's tough on a little guy. Be there to support him and love him and yes, he has to know it's not OK to hit his brother, but if you give him some of your time and understanding (without comment or criticism) you may discover the hitting stops on it's own.
I read a quote once that really stuck with me - "you can't bully someone into being kind".
Good luck!