Doing a full rewrite is often asking for trouble, though. Somebody out there on the internet maintains a list of companies which have pretty much put themselves out of business by doing full rewrites. Why is this? Because it turns out that a lot of that "old, ugly code" is in fact various types of bug fixes and other operational accommodations. And when you do a full rewrite you tend to lose track of a lot of that stuff, meaning that you get to deal with it all over again, often in a quite painful manner.

A former employer of mine had switched from using custom code to packaged code, which introduced plenty of problems of its own but overall things were generally going about as well as could be expected. Then they decided that they just had to have the latest and greatest version of that code from the vendor, which promised all kinds of flashy bells and whistles. They unwisely jumped into this with both feet (they were an early adopter), only to find that when those bells and whistles were added a lot of the old code had been rewritten, too, which introduced (or maybe re-introduced) a large number of very serious bugs. By the time those bugs were corrected (if they ever really were), the company (which was by now my former employer) was in such bad shape that they were basically forced to close their doors. They had pretty much lost control over their inventory and financials, for example, and had committed themselves to fulfilling contracts which were based on cost figures that were woefully incorrect.