I'd absolutely contract at least 2 teams (memphis & toronto) and would probably end up contracting 4 others (sacramento, charlotte, LA clippers, new orleans). That would be 24 teams, so 6 four team divisions. I'd cut the playoffs back to 12 teams, have byes for top two teams in each conference, and move the first round back to a best of 3. Each team plays 2 games with other conference (24 games), 4 games against own conference other divisions (32 games), and 8 games against own division (24 games) for an 80 game schedule, which should trigger a lot more inter-division rivalries. Plus each team would be so much deeper. To help offset the lack of jobs, I would create a true minor league in which team has its own dedicated minor league team and can bring players up and send them down a lot more freely.
WESTERN CONF.
PACIFIC - Lakers, Suns, Warriors, Trailblazers
NORTHCENTRAL - Jazz, Nuggets, Timberwolves, Bucks
SOUTHCENTRAL - Spurs, Mavericks, Rockets, Thunder
EASTERN CONF.
NORTHEAST - Celtics, Nets, Knicks, Sixers
SOUTHEAST - Wizards, Heat, Magic, Hawks
CENTRAL - Cavaliers, Pacers, Bulls, Pistons