I think Dennis and Levonian are pretty close to the things that I have read (I keep up on tat's for my own as well as gang related tats for work).
I asked a couple of tattoo artists I know about this (thanks for a great question Reba). The general consensus I got was that years ago, sailors (mainly merchant marines) would tattoo their life experiences on their arms. I believe this became somewhat of a trend in other walks of life and those in prison began doing something similar, including barbed wire. Over time, it became 'trendy' for others to get them and so it spread. Now, its often college students with them that have had served no time in prison. Its pretty much lost its image and is no longer associated with prison life, therefore has no general symbolism in today's society
Personally I find that barbed wire tattoos are kind of tacky. If you are going to take the time to get a tat, at least get some artwork or something meaningful to you.
It is kind of one of the issues that I have with tribal designs. I was fairly young when I got my first tribal tattoo, and have gotten a few more over the years. I'm working on a decent sized tribal tat right now (and some AD members will be helping me design it). The problem I have is that that tribal's have now become that trendy barbed wire. The design I'm working on is personal to me and is based off of my own roots. I won't go into a tattoo shop and pick a tribal design off of the wall.
I read somewhere that barbed wire tats started a very long time ago. Another source said it actually started in Russian prison camps and later spread to the rest of the world.