Personal reaction is that there are two (and a fraction) ethical options here.
1) Take the adequate job, work it for a reasonable amount of time (a year or two at least, unless they're really bad) while continuing to investigate what else might be available, and change jobs when something that looks better comes up. When the time comes, you'll be job-hunting under less pressure, with a paycheck coming in, and you'll have more experience to put on the resume, all of which will increase your chances of getting a better job next time around. And who knows, this might turn into something more interesting; I didn't really expect to spend my whole career working for one company, but they've kept me happy enough overall that I haven't yet bailed out.
1a) If you're expecting responses from other companies, it's legitimate to say you're interested but would like to hear back from the other to make sure you don't miss an exceptional offer, so you'd like a week or so before committing. The longer you ask for the less likely they will be to agree, so this doesn't mean continuing full-scale jobhunting, just closing out the process cleanly.
2) Decide you really don't want to work for them, decline the offer, and continue hunting. If you really think you not only can do better, but will probably do better, and if your finances will allow you to pass this one up, and you're otherwise comfortable with this decision, go for it. You don't necessarily have to take the first job offered, or even the first good job offered... but you have to decide for yourself whether the odds favor the gamble. In part that's a matter of how sure you are that you'll at least get another offer that would put bread on the table before you run out of money.
Both are valid answers.
Taking a job which you don't intent to keep long enough to at least pay back the company's investment in bringing you on board is not ethical. In some situations it may be unavoidable, but I'd try really hard to avoid it.