I'd prefer to keep it compact and terse, on two lines called Input: and Output: (note that POD needs a blank line between them). If two lines aren't enough then use one line per variable

I also like to write the POD for a function above the function - not at the end of the file. This is slightly awkward to do with POD though (all those blank lines around the =cut etc), but it looks like this :-

############################################################

=item daft_function()

This is a daft function.  Write general stuff about it here.

Input:  @daft, [ $DEBUG ]

Output: { FAILED => <0|1>, ANSWER => <string> }

or maybe if you want a bit more description

Input:
        @daft - array of useless items
        $DEBUG - optional paramter to give daft verbiage
    
Output:
        Reference to an anonymous hash with these keys
            FAILED => 0 or 1
            ANSWER => string - result of dafting the input 

=cut

############################################################

sub daft_function
{
    my ($self, @daft) = @_;
    #...
    return $result;
}
[download]

I haven't been using POD for very long though so maybe others have some more POD specific ideas?