I feel you, though oddly enough, some of my wal*mart stuff has held up better than some of my Old Navy stuff!
And the bottoms of my pants are all frayed too! Now though I just bite the bullet and have them hemmed.
As far as casual wear, I do like Old Navy and seriously they got me through when I couldn't bear the spend the cash at LB. It was just harder for me to find more business stuff. Their plus section didn't have a lot of business skirts (not too short and not too long) and that frustrated me.
Also for Kmart/Wal*Mart I found if I hand washed things like cardigans they held up a lot better. Though this is a lot harder to do when you have more than one person's clothes to wash!
Sorry if I sounded a little pissy.