It is a tough call.
Obligatory Joel reference: Things You Should Never Do, Part I
That said, there are of course cases when it is better to rewrite from scratch than to keep fixing the fundamentally broken. Causes I can think of:
- the original project team is gone, and noone knows how the product is implemented,
- the product is so low quality that replacing it with a new, bug-fested implementation would not make a major difference,
- the technology used is so obsolete, there is a pressing need to replace it with something new (e.g. in order to support some desired major feature).
All in all, you must take into account that rewriting from scratch is going to take a lot more time and effort as anticipated.