I'm not saying that nailing into the floor was a bad thing, only if the floor is not poured properly, and is thin. I only pointed that area out so a waterproofer could seal it if it needed to be.
As far as going after the contractor, you will need to look at the whole package.
How much work was he supposed to do? What did he do wrong? How much money are we talking here? Is he a licensed contractor? Is he incorporated? Is he still around?
Can you prove in court that the work was done in a manor not consistant with general construction practices?
And last but not least, does he have anything to get?
I am assuming that no building permits were taken out for this project, so no inspections were performed. (You, not the contractor, would be responsible for them.)
Finally, I'm not saying that you need to take the walls down at this point.
What I would do is talk to my local Inspection Department and explain the problems you are having, ask for an inspection, (be prepaired to get the permits). Also, how much wirering did he do? and is he licensed for electrical work? The Inspection Department will want to know if he did work without the proper licenses. But, more importantly, you need to have the inspections for your own safety!
My next step would be to call 3 competent contractors to come in and look at what you have and get some estimates to correct the problems.
You may still be able to use this area for bedrooms if it can meet all the safety requirements. The only way to find out is to ask.
If you do not have the the means to have the proper egress requirements, you may be allowed in your area to meet the requirement by useing a domestic sprinkler system. (usually no more than six heads of the system)
Anyway, before you rip anything out, get it looked at.