Electricmanscott,
A)There are some poco's and AHJ's that are interperting this code to apply to upgrades, as in my area....
1) an upgrade i have next week will incorporate 12 AFCI's @ $40( my cost) ea.
2) Multiwire circuits are a problem...****
B)There are others who claim it the NEC is not retroactive.
C)There are many that would claim it's "A good idea"

210.12 Arc-Fault Circuit-Interrupter Protection.
(A) Definition. An arc-fault circuit interrupter is a device intended to provide protection from the effects of arc faults by recognizing characteristics unique to arcing and by functioning to de-energize the circuit when an arc fault is detected.
(B) Dwelling Unit Bedrooms. All branch circuits that supply 125-volt, single-phase, 15- and 20-ampere outlets installed in dwelling unit bedrooms shall be protected by an arc-fault circuit interrupter listed to provide protection of the entire branch circuit.

commentary
The definition of arc-fault circuit interrupter given in 210.12(A) explains its function. The basic objective is to de-energize the branch circuit when an arc-fault is detected.
Arc-fault circuit interrupters are evaluated to UL 1699, Safety Standard for Arc-Fault Circuit Interrupter, using testing methods that create or simulate arcing conditions to determine the product's ability to detect and interrupt arcing faults. These devices are also tested to verify that arc detection is not unduly inhibited by the presence of loads and circuit characteristics that may mask the hazardous arcing condition. In addition, these devices are evaluated to determine resistance to unwanted tripping due to the presence of arcing that occurs in control and utilization equipment under normal operating conditions or to a loading condition that closely mimics an arcing fault, such as a solid-state electronic ballast or a dimmed load.
UL 1699 is the standard covering arc-fault devices that have a maximum rating of 20 amperes intended for use in 120-volt ac, 60 Hz circuits. These devices may also include the capability to perform other functions such as overcurrent protection, ground-fault circuit-interruption, and surge suppression. UL 1699 currently recognizes five types of arc-fault circuit interrupters: the branch/feeder AFCI, combination AFCI, cord AFCI, outlet AFCI, and portable AFCI. Placement of the device in the circuit and a review of the UL guide information must be considered when complying with 210.12. The NEC is clear that the objective is to provide protection of the entire branch circuit. (See Article 100 for the definition of branch circuit.) For instance, a cord AFCI could not be used to comply with the requirement of 210.12 to protect the entire branch circuit.
Section 210.12 requires that AFCI protection be provided on branch circuits that supply outlets (receptacle, lighting, etc.) in dwelling unit bedrooms. The requirement is limited to 15- and 20-ampere 125-volt circuits. There is no prohibition against providing AFCI protection on other circuits or in locations other than bedrooms.**** Because circuits are often shared between a bedroom and other areas such as closets and hallways, providing AFCI protection on the complete circuit would comply with 210.12.