I've given a lot of thought to prison too. The conclusion I came to is that it's evolved more through accident than design and it's completely disfunctional.

Historically prisons were only ever used for people awaiting trial or politically sensitive persons who couldn't be killed or allowed freedom. The idea of using it as a means of punishment evolved from there, and the idea of reform was an afterthought.

I'd abolish the concept of prison as punishment, it should only exist as a security measure. Punishment should come in the form of compensation, basically returning to a wergild type system. Judges should also impose security restrictions to protect the community, but it should be up to the convict to fund and organise them. Less a case of sending them to prison and more a case of telling them they have X days to find a prison willing to take them or they'll be exiled.