Yes its bad - but better than standing
I get the (packed) 0705 from Woking to Waterloo every day which is a "blue" SWT service described in this article. In a typical week, I will get a seat 3 mornings out of 5 and it is always in the blocks of 3. The middle seats are left empty by commuters who don't want to hold hands all the way to London.
The reality is, however, that despite how uncomfortable it may be to squeeze six people in this confined space it still beats the hell out of standing. I don't think its quite as bad as the MP suggests but she is right about working; reading a newspaper is nigh on impossible in this configuration, let alone doing some work.
I typically return home on a "white" SWT (the lower capacity train mentioned in this article) which is incredibly comfortable IF you can get a seat. Unfortunately, by the time this train leaves Waterloo its 12 carriages are completely full. Short of lengthening platforms and creating even longer trains, I really don't see a better solution than stripping out the tables and using the 3+2 configuration.