Jail sentences are hurtful as they are now; but we also have the option of changing the jails themselves. The constraint of "keeping people outside normal society" allows for many variations.

As one example, there is the idea of penal cities, for convicts not considered immediately dangerous to other people (i.e. not serial murderers). They could perhaps use a hi-tech method of tracking and monitoring all inmates to provide an experience both more pleasant and more productive than ordinary jails.

Also, are you aware of studies like the ones you describe for countries other than the US? I often hear anecdotal evidence on the net about US jails being specially bad in many respects.