Well maybe Martha Stewart is heading for the pokey after all. Generally, I don't think that sending people to prison does much to prevent other crimes. Jailtime should be predicated on punishment, not deterrence.
BUT, I think that white collar crime is an exception. Rich executives really really don't want to go to jail and they're probably knowledgeable about both the law they'd be breaking and celebrity cases like Stewart's. So I think it's good for society to throw the occasional Martha Stewart (and Sam Waksal--who was far stupider and has a good six more years left to think about it) in jail, even if it's unpleasant for her. That being said, I don't think there's any reason to put her away for long. Waksal's crime was far worse. Seems to me that six months-one year is about right. Just enough to send a loud message.