Not at all, it's just that the EF has certain design flaws and that it was more than slow in it's upgrades, but technically, the Eurocanards belong to the best non stealth fighters that are available today, with systems or capabilities even comparable or equal to counterparts in US 5th gen fighters (SC, avionics, RCS reductions, passive detection and targeting...).
With the new funds from the KSA, the EF now will get a good push too, which still doesn't make it equal to the Rafale, but much better as a multi role fighter (A2A, CAS with a variety of weapons, cruise missile attack, although range limited). IF it would gets AESA, CFTs and a the SPEAR 3 (or a similar stand off PGM), it would beat any non 5th gen fighter in all roles. But all that requires more fundings and might be available only by 2018 to 2020).
Not really, because that would mean that the only limiting factor to make JF 17 highly capable is the lack of funds, but that is not the case. Even with unlimited funding, you won't be able to put latest foreign weapons, radars or systems on it, by the simple fact that they are not provided to China and Pakistan. Not to mention that you have to take to account the aims and limitations of the design itself, which was never intended to be a high end fighter.
So all the KSA could do with their money is, to fund more Chinese upgrades in first place, or to get hands on certain techs and weapons that are available for JFT. At the end of the day however, they have 2 very high capable fighters with the EF and the F15, that don't leave much operational benefit left for a JF 17, no matter what funds you are pushing into upgrades. Since the KSA has no importance of adding a cost-effective to operate fighter, there is no point in at least highlighting better cost-benefit ratio, so that's no point either, which would mainly leave political considerations.