Deadlock Within Stored Procedure - Need Help

We just went live today with a production SQL Server 2005 database
running with our custom Java application. We are utilizing the jTDS
open source driver. We migrated our existing application which was
using InterBase over to SQL Server. To minimize the impact to our
code, we created a stored procedure which would allow us to manage our
primary key IDs (mimicing the InterBase Generator construct). Now
that we have 150+ users in the system, we get the following error
periodically:

Caused by: java.sql.SQLException: Transaction (Process ID 115) was
deadlocked on lock resources with another process and has been chosen
as the deadlock victim. Rerun the transaction.
at
net.sourceforge.jtds.jdbc.SQLDiagnostic.addDiagnos tic(SQLDiagnostic.java:
365)
at net.sourceforge.jtds.jdbc.TdsCore.tdsErrorToken(Td sCore.java:2781)
at net.sourceforge.jtds.jdbc.TdsCore.nextToken(TdsCor e.java:2224)
at net.sourceforge.jtds.jdbc.TdsCore.getMoreResults(T dsCore.java:633)
at
net.sourceforge.jtds.jdbc.JtdsStatement.executeSQL Query(JtdsStatement.java:
418)
at
net.sourceforge.jtds.jdbc.JtdsPreparedStatement.ex ecuteQuery(JtdsPreparedStatement.java:
696)
at database.Generator.next(Generator.java:39)

Here is the script that creates our stored procedure:

USE [APPLAUSE]
GO
/****** Object: StoredProcedure [dbo].[GetGeneratorValue] Script
Date: 06/12/2007 10:27:14 ******/
SET ANSI_NULLS ON
GO
SET QUOTED_IDENTIFIER ON
GO

CREATE PROCEDURE [dbo].[GetGeneratorValue]
@genTableName varchar(50),
@Gen_Value int = 0 OUT
AS
BEGIN
SET TRANSACTION ISOLATION LEVEL SERIALIZABLE
BEGIN TRAN
SELECT @Gen_Value = GENVALUE FROM GENERATOR WHERE
GENTABLENAME=@genTableName
UPDATE GENERATOR SET GENVALUE = @Gen_Value+1 WHERE
GENTABLENAME=@genTableName
COMMIT;
SET @Gen_Value = @Gen_Value+1
SELECT @Gen_Value
END


This stored procedure is the ONLY place that the GENERATOR table is
being accessed. If anyone can provide any guidance on how to avoid
the deadlock errors, I would greatly appreciate it. The goal of this
stored procedure is to select the current value of the appropriate
record from the table and then increment it, ALL automically so that
there is no possibility of multiple processes getting the same IDs.