You could try removing the skirt if that won't leave the sleeper/mattress part visible, or consider removing the existing skirt's pleating and stapling it on straight/flat so it doesn't look ruffled. Some funky throw pillows would definitely help too - I can see some reminiscent of the wool patterned blankets and ikat prints, or a funky floral/geometric, or some neat medallions. The burnt orange upholstery would work great with a variety of modern color schemes. I can see it with a slate blue or olive or mustard or a warmer charcoal grey (or all of the above).

As for the seat cushions, maybe get the foam changed out/re-cut at an upholstery supply shop or re-wrap them in some new Dacron batting? That would plump them up a bit.

Ooooh absolutely: I don't know the rest of the decor but what about affixing decorative buttons at all or some of the corners of the tufting? I think a line of large white buttons (or sky blue? or hot pink?) would be very, very cute. It has to be cartoonish looking -- it can't look like you are trying to dress it up. It needs to be playful.
Another option would be hot glueing grosgrain ribbon or similar in a contrasting color somewhere -- perhaps just a straight line around the skirt top or base of the skirt. Speaking of the skirt -- can you remove it, then apply a ribbon to cover the old seam? and paint the legs white? I;m imaging either a bone colored ribbon or a traditional striped grosgrain that includes a bit of orange. Then a couple of pillows that pick up the other colors. http://www.amazon.com/Horizontal-Stripes-Grosgrain-Ribbon-Yards-Pink/dp/B003I2EGBG

pam h
howtorunyourlife.blogspot.com

Invest in a good upholstery cleaning to bring out the burnt orange even more. Then, find some fun pillows that complement the color (like bold teals, light grays, and even chartreuse. And hang that artwork! :)

I agree with eveb1123 -- if you can, take off or modify the skirt. Then add amazing pillows. It will look vintage & cool!

I read somewhere about making slipcovers out of dropcloths. I think that could look great. I actually like it as-is though. Try just decorating around the color/style. Make it look more like it belongs. It's screaming for some patterned pillows.

I would throw it out and get a blow up mattress for guests until I could buy another sofa.

I'm all about the cute throw and pillows with an unpleated skirt option. It's kind of a funky cool sofa. When you can afford to, i would just get it re-upholsertered rather than get a new one. It has a fun shape and you can ask the upholtry folks to tailor up the arms since they are the least contemporary part about it (other than the skirt).

I'm in the exact same situation right now! Some of the questions that I've asked myself: do I want a short-term or long-term solution; how else do I want to use this space/couch when I don't have guests; what is it that I don't like about my current couch/space (there are some things you just can't change!)?

You can purchase a nice, yet inexpensive, slip cover at Bed, Bath & Beyond (don't forget your 20% coupon). You can update the look by adding throw pillows/blanket, or making updated cushion covers (Michael's has great patterns and sales). I agree that removing the skirt, if possible, would be a low cost face lift.

I put unused furniture on Craigs List and so far have $300 toward my new couch! There are a ton of convertible couches on-line starting at $150; of course, you get what you pay for in most cases so do your research. Also, I noticed that many convertibles range 68-70" long; a six foot person is 72", so mind the dimensions.

Sometimes the best method is to take the proverbial elephant (or sofa, if you will) as the given and work from there. I initially was also going to say re-do the skirt, but after some thought, I think the sofa should stay as is with nothing done to it (unless it needs a cleaning or a topper to make the mattress more comfortable.) Get pillows that match your preferred style (contemporary? chabby chic?) and other elements in the room to match that style - like a rug or curtains, furniture, what have you. The orange can be made to go with a whole slew of things - because it will always stand out. Have fun! I personally like modern and sleek and would try out some simple grey geometric patterns to highlight this Eccentric Aunt of the Chesterfield.

The couch is a good start to a bohemian look. Remove the skirt and change out the now exposed legs with curvy dark wood bun legs (available online). It would give the sofa a more streamlined look. Bonus, you can use the legs to change the seat height to suit, say if you think sofa to low.

Also, if the cushions have a zipper, consider replacing the inserts or wrap them in batting to give them more fluff.

Do nothing to the couch except pillows and a nubbly grey or cream throw. Instead of taking off the skirt, how about putting a small-ish coffee table in front of it, one that will easily slide out of the way when you use the fold-out bed for guests? In fact, how about a wicker trunk that would hold the linens for the fold-out bed? If you can paint the wall, paint it a darker color that would set off the cozy warm glow of that orange. And hang up the pictures. Get something matte-gold, either for on the coffee table or on the wall. And paint the bookcase, like someone above said.

Personally I would try to remove the skirt but I don't think it looks horrible with it on. I'd let the orange stand on its own and accessorize it with light neutrals, focusing more on texture than pattern. Go minimal with just a faux fur throw over one arm, or amp up the cozy factor with a whole row of square and bolster pillows in whites and creams (with a touch of gold, perhaps?). Hang the artwork; add a brass reading lamp, something to reflect light (a mirror or glass vase, etc.), a small table, a basket to hold extra blankets or pillows, and a plant or two. Also, if it fits your style, color-coding the books will automatically make the couch look more modern. I think it will work nicely!

I really like the sofa, as is!

put the pictures on the wall above it, and you're golden

The worst thing that I see is the middle cushion. If you really have to keep the couch, I'd try to get it re-plumped somehow. Don't know how though - maybe take it to someone who reupholsters things. But if you'd spend the money for that, why not reconsider just ditching the sofa and getting something inexpensive for guests to sleep on.

If you want to plump up the cushions, take the foam out of the zippered covers, wrap it in fluffy batting and restuff them.
How about a vintage granny square afghan to go over the 3 seat cushions?

I have to ditto what homebody says. Try building your room around the couch-- my suggestion is to paint the walls bright white. White seems to work really with midcentury decor and makes everything look fresher.

We have a sleeper sofa which is in great condition except for the upholstery. We had a custom slipcover made that can stay on even when the sleeper is opened up.

I like it! I'd start with giving it a good cleaning- maybe find out what a local carpet cleaning co would charge to steam wash the heck out of it? Getting it cleaned might be cheaper than a slipcover.
My favorite part about it is the diamonds on the back. So I'd shy away from throws or lots of pillows.
I agree with removing the skirt- if the legs are presentable. Of course, you can also buy new sofa legs.
It may not be worth the trouble, though, if the springs are gone and its not comfortable.

The color is a beautiful rust/terracotta color. Just keep that in mind and add pillows and throws that work with terracotta. For something neutral, try blacks, grays, flax color and oatmeal. For a subdued palette, use soft blue-greens, gray-greens and navy blues. If you're interested in bright pops of colors, add hot pink, lime green, turquoise and lipstick red. Whatever you prefer with this should work - even though it's a color, it really is a neutral that should work well with most color schemes. Good luck and enjoy.