I applaud the pro-active nature of the organization on this, and appreciate your efforts to have a strong preference of carrot over stick.
I have been managing IT Operations teams for ~10yrs now (with a rooted background in SysAdmin), and more often than not, in my own experience, it is the organizational culture that often strongly correlates to the work output of a collective team. I have worked on companies that paid absolutely ass and were not overly generous with there employees, yet people understood the purpose, the mission, and their role, and gave 110%. I have worked at companies that were more than generous with payroll and side benefits, and folks slacked off.
Without knowing you or your background (nor the respective company), I can say that folks are often cognizant of the extremes they can get away with at work. If you (or the company as a whole) conveys an easy-going atmosphere where even the slackers are well tolerated, well, water sinks to the lowest point. This can often be detrimental to others around them, as it results in "Well if they aren't going the extra mile, why should I?" I believe just about anyone who is reading this has had that very thought cross their mind at one point or another, and it can be a valid one. Giving someone free massages, or cupcakes, or even a hooker aren't exactly motivational items - actually, they work the other way, in that encouraging folks to "take a break" from things, these same folks who even when working you are suggesting aren't putting in a sound effort.
Solution? Again, without know you or the org, do away with the massages, and most other extraordinary benefits that cost the company money, and instead convert this to regular financial bonus incentive. Make a big point on how performance relates to money, and more times than not, I find folks will go above and beyond to earn the extra incentive. You may have a few bad apples you clearly need the stick, but between the two, I'd suggest you may be on the way to success.
Best of luck!