Yes, even though her crimes were horrible, the sentence was probably adequate. Think about it ... 30 years in prison. That is a long, long time. Then she spent some years in an asylum. Of course, it's possible that life in prison might have been a better sentence. She murdered three women and turned them into soap and teacakes. That is horrific. But she spent the rest of her life in prison and in an asylum, and then she died, so I'd say that's adequate.
What does it matter if she is an asylum or jail? If she isn't out and about, killing and turning people into soap, I see that as win for society at large. I expect that neither 1940s Italian prisons or asylums were particularly pleasant places to pass the time, and that she didn't enjoy the rest of her days.
Cianciulli is guilty of a horrible crime and should have received life in prison at the very least. The time in the asylum may have been justified, but once out of the asylum only life in prison without the possibility of parole would be appropriate. Murderers need to pay for their crimes, not be freed prematurely.
Murderers, especially those who have committed multiple murders, should never be released to freedom. They should remain in prison for life or placed in an asylum if they are mentally ill. The government should not take a chance with the safety of the public by allowing a murderer to go free, even if they are old.