Mike: The point of punishing people by putting them in jail is that they are not free to do what they want and, most importantly, that they can't go wherever they want to go. You don't have to treat people badly for that to be a punishment -- try staying in your house for a year or so.

That said, this is hardly unique. It's actually quite common in some European countries. And it makes sense, you want people that are released from jail to be integrated in their surroundings and not lose all outside contact. That way they're much less likely to commit crimes again.