To follow up on mook's musings:
Contraction should be combined with the creation of a new league that pays better than the D-league and worse than the NBA. So, maybe 20 NBA teams, and 20 teams in this new league, and... have relegation/promotion battles, like in European "soccer". Trust me, those are AWESOME: they're about the only thing that makes being a fan of a team like Southampton, Stoke or Leeds United (let alone Exeter) exciting. They allow crappy teams to feel good about themselves, as they dominate the lower league. Meanwhile, instead of tanking for a draft pick, the bottom-feeders of the top league are scrapping like hell to avoid relegation.
Everybody says it could never work in the NBA, but I don't really see why not. The Premier League is bigger business than the NBA (in fact, is almost certainly the most popular sports league in the world), and it works there.