Over the years, I've shifted back and forth of my thinking that people are inherently "good" or "bad". I think I've come to the thinking that most people are basically "good" - but that the capacity for evil lives in all of us.
For me, I think the best description for good versus evil comes from Harry Potter: You must choose between what is right, and what is easy. We all generally know what the "right" thing to do is - but hey, it's easier just to take that $5 that nobody claims, or tell your kids to shut up instead of listening to them (something I must confess I've been guilty of sometimes), or just kill that guy rather than listen to him and actually think about what he says.
Yes, I think that people are basically good - but you have to keep the environment around them up so there's always a *reason* to remain good. Which is why I was fascinated when I heard Dr. Philip Zimbardo speak once on NPR, about his experiments into evil back in 1972 - an experiment that had to end after 5 days. How that same experiment was played out again in Abu Gharib in Iraq - with the same results, only worse, because there was no one to stop it.
There's an interview with him over at Wired as part of TED 2008. On the heels of the new discovery that 1 in 100 US citizens are imprisoned, makes me think how much of "bad" is situational. Mix in unemployment with hopelessness with poverty with poor health with a justice system more bent on punishment than reform - and perhaps its not surprising that those in the prisons go from bad to worse.
Anyway, read the interview. I'm intent on reading his book some day (and now that classes are finally over save for one final, I have some time to get caught up on my reading, so I might do it).