I like "logical consequences" it helps kids to understand that every choice/decision in life has a consequence - positive or negative - and that they affect the outcome.
So if my daughter acts up during dinnertime I tell her, do it again and you're booted from the family table. If she does, she gets excused from dinner. After she whines about how hungry she is, can she come back, etc we just ignore it. After we finish dinner, she is allowed to come back and eat, alone. (Which she hates.)
Almost every naughty behavior gets one warning about what we expect, then she KNOWS she will be removed from "the fun" and there will be a consequence.
Once they know that you'll follow through with the consequences, then they're motivated to behave in the first place.
I think timeouts are good for a cooling off period if a kid is acting up and giving them time to reflect on what a better choice would have been. But those too get "stale". I think if you start having some consequences like chores around the house that help you out, then they'll be motivated to be nicer to each other and you.