Many jack-knife style sofas are pretty much junk. I totally rebuilt mine with more springs, better foam and much more supporting framework. I still wouldn't want to use it as a bed, but it is now OK for sitting.
If you don't have the skills to make it in to a usable piece, then a good upholstery "might" be able to salvage it. Replacement is an option, but you might wind up with junk like you have. The best results would be from a shop that can build a new one from scratch, but that would be costly.
Page around in my photos to see what I did. http://i1270.photobucket.com/albums/...ps27b44a00.jpg