As long as they're doing jobs for the county, or city, or state, or whatever, I don't see a problem with it. Taxpayers are already paying to keep the prisoners in jail. Why not get some benefit from them? And if it's a voluntary program, and the prisoners can accrue good-behavior time along with it, then everybody wins.
Using them to do work for private contractors, on the other hand, is a problem. Too much room for fraud and graft.