I'd always thought of it as kind of being both. You don't need to subject inmates to the equivalent of torture and humiliation in order for them to become institutionalized, to fall behind on the world around them, to disrupt their careers and family ties.

Those things alone are pretty terrible. And that's before you get into the whole "solitary confinement/tacitly accepted rape/etc" things that plague prisons.

I personally think those things are pretty terrible, but someone without a family, a steady career, and who is already behind the curve (out of work, remember?) might not particularly mind losing those liberties.

In my opinion, it should bring people to repentance and reintegrate them into normal life - helping them, as opposed to the society. They need the help, after all.

Interesting fact: The word penitence, from which we get penitentiary, stems from the latin "paeniteō" - which means "to bring regret"...