Small prison cells to give folks a 'time out', where they can do nothing but stand around and watch a timer tick down? Don't know about you, but that sounds terribly un-fun. The 'escaping' thing would just lend to some folks to get repeatedly thrown in jail, just so they can escape and have people try to fight them. Very unrealistic as well, as any prison that was so easy to get out of would be shut down and rebuild rather quickly to keep those folks in.
The only reason for a time out would be to punish the player behind the character if they are misbehaving. Any in-character 'punishments' need to punish the character, -not- the player. Punishments -have- to be fun for the player. For this reason, I have suggested an entire prison map for 'criminals', where there are many 'prison' type things to do, skills that can only be learned there, and quests that you must start or continue there. It would be like the DR, but you could not get out until time was served. Certain quests within the prison could reduce your time. Being sent to prison would change your faction status with many of the factions inside and outside of the prison as well, making 'good' NPCs trust you less, while 'darker' NPCs (and even some Mobs that would 'become' quest giving NPCs) might open up more.
It would be quite the opposite of the Winch area and quest. It would be very easy to get into, but hard to get out of. Also, not everyone would -want- to go there, as it leaves a shadow on your character in terms of the factions.