The prisoners would go crazy from the lack of variety. Nutraloaf sucks, and as bad as prison food is the same bland loaf of crap day in and day out will just make everyone angry. People aren't robots, and putting at least a little effort towards keeping prisoners from causing trouble is well worth it.
Plus, if it's the baseline, how do you use it for punishment?
"Pink slime" isn't served straight up. It's used as an extra-lean filler and generally isn't more than 25% of the food. It's made by extracting lean meat from low-grade trimmings like cartilege, and treated with citric acid or ammonia to kill bacteria.