Used to be that you could replace the ungrounded recept. with a new, ungrounded type recept.. The reason being that to install a three prong, grounded style receptacle gives false representation of ground. The other trick to this problem was to install a G.F.C.I. recept in its place. G.F.C.I. will still function properly without a ground which gives adequate protection to the device but, in the state of Michigan, the new Michigan state residential code for one and two family dwelling units, which takes priority over the N.E.C. will not allow either of these methods.
In Michigan, you must now properly ground the new three prong recept. by means approved by the Michigan Residential Code.
The quick, easy and cheap answer to the problem is gone for good here and since the majority of homes here were built before 1955, it's going to get costly around here.