I had actually been rattling around a zombie script in a prison for a while. Like you said, the isolation of it would be key. If it was wide scale and the power went, you're talking total lock down. You know there'd be riots giving you constant "new dead" and if you go the virus outbreak route, crap, think about all of those people in such close quarters! Not to mention them trapped in the cells....trying so hard to get through the bars that they're literally mashing themselves through!
I don't want to be arrogant enough to give you ideas, like you don't have your own, but I always wanted to end it with them thinking that it was totally isolated to just them. They get the power back on, finally get outside, then jack on the perimeter fence lights only to see thousands of dead up against the fence ALL the way around! Imagine the scene from Day of the Dead (original) except all the way around the prison.
Okay, so I just ruined my movie, but anyway, good luck and keep us updated!!!