It's odd when the gropenfuhrer proposes what might be a good thing but then you have to realize that, no, wait, it's probably a really stupid thing. In a true "only Nixon can go to China" moment, Arnold is proposing releasing up to 1/3 of the California prison population. The thing is, when something like this is being proposed as a budget-cutting measure rather than a "good public policy" measure they're bound to get it wrong.
I'm all for speeding up the release of many/most/all non-violent drug offenders but you obviously just can't do it all at once, and you can't do it assuming that it will magically suddenly save lots of money. Our society has put up so many barriers preventing the re-integration of previously incarcerated felons into "normal" life that one can't imagine a successful mass prison release program without spending quite a bit of additional moneys on reintegration programs.
That isn't to say such considerations should stand in the way of what is the right thing to do - releasing nonviolent drug offenders. But, such policies have consequences which need to be addressed. It ain't going to, in the short run, plug the budget hole.