Should I drop out of gradschool or finish out a Masters?
At the very least, I would consult with other students or faculty with their opinions as to your situation.  Keep in mind that even if you drop out, you will likely still have to list your time at your current institution on your CV.  If you finish your masters, you will have something to show for your time here.  However, you may be better off consulting with faculty/department first and see if it is possible to transfer midway to another institution to complete your PhD.

Best of luck!