Ideas on bringing our prison system into the 21st century?

While visiting Philadelphia, I saw the old Eastern State Penitentiary. At the time of its building, it was considered extremely innovative. It seems to me we have not made much change in how we handle prisoners since then (1829).

Criminals still return to a life of crime at a high rate, costs are huge and rising, prison populations are huge and rising, prisons are rife with corruption and black market contraband.

In a number of interesting threads on Fluther, there has been discussion of our prison system. What do you think we could do to be more innovative about how we handle convicted offenders? Can technology play a role? What are your views on the roles of punishment and rehabilitation?