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Capital punishment doesn't work. The only thing that can be done to improve the situation is an improvement in Somalia.
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I think yes and no.
Very publicly hanging someone from a yard arm would tend to have a chilling psychological effect on would be pirates,
pour encourager les autres and all that. Would not end Somali piracy, but being killed for your trouble ups the ante a lot versus catch and release.
On the other hand, I agree -- as long as Somalia is a poster child for "failed state" status, desperate people will do desperate things. Clearing the sea lanes of Somali pirates would just pass on that mess to some other venue, be it Somali civilians, neighboring states, etc. Which might be acceptable to the world, which honestly doesn't seem to care except when Somalia's situation inconveniences merchant shipping.
On the other hand, the "home front" whinging and generalized distress that would arise from summarily executing pirates -- or even executing pirates after lengthy international trials (can you even get an international court to do death penalties these days?) -- would undermine the piracy suppression effort more than it would help.