When I had tantrums, my parents sent me to my room. Not because having a tantrum is wrong and I needed to be punished, but because I wasn't in control of myself and needed to let my anger play out without bothering anyone. And you know what? They stopped. They got boring. They taught me that I couldn't get what I wanted that way. (Some parents give in and teach children that tantrums are an appropriate way to get what you want. I don't advocate for this at all.)
Misbehavior was "punished" by the natural consequence of the action. Being rude in a social situation = being removed from it. This how they taught me that you follow society's rules or you don't get to appreciate it. (Intentionally) breaking my stuff = losing it. I don't break things.
The spoiled kids aren't necessarily the ones whose parents never coerced them to behave; the spoiled kids are the ones whose parents hid them from the real consequences of their actions.
Saying "Mommy doesn't like it when you do that" and then driving them to the Zoo anyways is completely different from "Mommy doesn't like it when you do that and I've asked you to stop three times. I don't want to take you to the Zoo anymore; we're going home." The latter option sends the message without also making you an enemy worth rebelling against. Spanking does.
"Teaching" someone that bad behavior leads to a spanking doesn't make them understand why it's bad. It's not true of everyone, but some children (myself included) would not think "when I do this, there is pain, so I shouldn't do this.", as with touching a hot stove or an electrical outlet. They would think "when I do this, my parents hit me, and because they hit me, I don't like them, so let's think of some good ways to make them angry... hmm..." and so the arms race begins.
I don't think the name "timeout" is good, though. It makes it sound too much like part of a game.
I agree, though, that the "timeout" shouldn't be the worst threat in a parent's disciplinary arsenal. Spankings should be given out rarely and threatened far more often.
Beating their ass when they deserve it should be a last resort -- a clear signal that they have gone too far this time. And the fewer of those you have to hand out, the better. If your kid actually listens to reason all the time, great! But for most of them, sometimes this is necessary, and assuming your kid has a normal response to stimuli, it should work a hell of a lot better than a "timeout" (how is that a punishment anyway?).