Unemployment is a safety net. It's point is to catch people who have fallen (and keep them from falling farther). It is not the responsibility of the safety net to get them re-employed. Limiting the safety net in some way defeats the purpose of the safety net.
It is really too easy for people to say that so-and-so's unemployment or inability to get re-employed is entirely their fault. Or that they get "comfortable" living off of handouts. Until of course you are the so-and-so and all of a sudden realize that "wow, this is really hard."
Of course people cheat the system. But, then people cheat the 'good' parts of capitalism too. It doesn't make sense to throw out entire systems because they aren't perfect.
Until someone does a legitimate study that actually finds that having people on unemployment for a long time has an over all net negative effect, let's keep it as it is.
Also, keep in mind that tossing people off the net isn't free. They won't all of a sudden become magically employed. Instead the costs of supporting them will shift elsewhere: other social programs, friends and family, community organizations, or they end up falling further into a world of drugs and crime (in which case society still pays the bill).
The real solution is the creation of legitimate work opportunities.