I'd been thinking the same - small plants for indoors and larger planters for outdoors would be nice. If there were more hedge sprites (left/right/top end and single square) then a 1x1 hedge would make a passable bush.
Purely cosmetic items wouldn't take much coding/testing or they could give simple effects like a small bonus to the Environment need. Paintings and posters would be cool too - they could be applied to one side of a wall just like a window. Prisoners would not be allowed to have geology hammers though! 
I think my favourite idea was a library trolley which travels like the laundry cart but delivers books to prisoners who don't leave their cells. Otherwise the bookshelf object should be set up to give Literacy (currently the description says it gives Recreation but that seems not to work and we already have TVs and radio for that need anyways).
