I haven't seen any negative effects of being in jail. It's better than paying the huge fine if you've been on a giant killing spree. --- "If the Illusive Man was voice by Charlie instead of Martin he'd be snorting coke off Miranda's ass." -Revan73 GT: Radiant Sol
Is- you're halfway to leveling up a skill- say half way to leveling light armor to lvl 46. Now you're back down to just 46, not half way to 45 or whatever --- GT: "III RHIN0 III" "It's time to kickass and chew bubble-gum, and I'm all out of gum!" ~Duke Nukem
Your anus grows two times in size allowing you to smuggle in additional lockpicks.
... Or your current level progress is reset. For example, you're one dagger away from being level 89 in smithing and you go to jail, well you'd still be 88 but now your progress to 89 is reset, which will also effect your total level progress as well. The higher your bounty, the longer the time, and the more skills' progress reset. A minor penalty at lower levels but when you pass level 50 it becomes quite troublesome.