I know - a lot of people will have a knee jerk reaction against an article from Reason, but this makes a lot of sense:

http://reason.com/archives/2011/06/2...s-are-wasteful

The gist of it is - don't bother with non-violent offenders, and make sentencing more streamlined and consistent. IE - no 5 parole violations and you go to jail for six months, it should be one parole violation and you go to jail for one month.