Labman is right; any wiring that met code at some point in history, by "backward compatibility" (to use a programmer term), meets code today. Provided you aren't altering it.
Once you are going to rewire something though, you can't leave it there. You can't add on or modify it, you have to remove it and run new wire. This is according to my electrical inspector... when i ran new wires, he told me I was not even supposed to leave the cloth-insulated wire in the walls at all, even though it was no longer connected! (it's possible that was just his preference, but it does make sense to avoid any future confusion)
Anyway, you'll be surprised how tough this stuff is to get out! I am amazed at the work that went into older homes.
My own decision was to remove all of it - every knob and wire, and run all brand new stuff. Mostly this is because, after 95 years, my house had a real hodgepodge of new combined with old, over many generations of materials, and I didn't like it. I had aluminum mixed with copper, 2 and 3 prong outlets, lots of junction boxes, etc. I did not consider it safe.
HOWEVER! THere's a lot to be said for the "if it ain't broke don't fix it" argument! It's a LOT of work to rewire a house. Very expensive. My things to consider would be:
1. are you running lots of appliances/items all the time
2. are you running lots of GROUNDED appliances, using 2-to-3 prong adapters a lot
3. do you have enough outlets
4. are your 3-prong (newer) outlets properly wired/grounded (you'll need to check, like Labman said)
5. are you wanting to install any insulation in these walls
etc.
When i considered these things, I decided it was worth the work. My old house had ONE OUTLET per room!! That's a little tough to live on in today's world... and dangerous, if you want to run multiple appliances.
Then again, I have a degree in Electrical Engineering, so I knew I could do it myself

Don't forget to weigh the cost of having an electrician tackle this... it can be hefty.
Labman's voltage detector tool sounds great, I gotta get one!
Best of luck,
james