Assuming that your derailer is not damaged or worn out, it should work perfectly well. The only adjustments are to the high and low limit screws. The condition you describe sounds like the derailer is not mounted correctly on the hanger. You're not getting any spring tension.
The common period upgrade was the Suntour VGT, but the common period replacement was another Simplex. They were very inexpensive and meant to be discarded and replaced when they wore out. You can still find new ones for $5-$10.
This may help you. Ignore the indexing part.
http://www.sheldonbrown.com/derailer-adjustment.html