If you want properly grounded receptacles, the k&t in existing locations will obviously have to be rewired.
Updating your service should only be done by a qualified electrician. A service upgrade is no job for a homeowner simply because there is alot you need to know before jumping into it, like the proper size GEC for a 200amp service. Do you know what that is? Do you know if there are any multiwire branch circuits, and do you know how to properly install them onto the bussbar?
The last thing you want to do is start a project like this and still be in the dark with no power well after it's already dark again.
just my opinion.
