Look at the bottom of this page:
http://osl.birzeit.edu:8080/wiki2/index.php/Sudo
Looks like you can easily confine someone to a single directory by:
username ALL= /bin/kill,/sbin/linuxconf, /usr/sbin/jim/
Where /bin/kill and /sbin/linuxconf are specific commands username can run and /usr/sbin/jim/ is the only directory he can run them from (at least that's my understanding, I haven't actually tried this...)