You can have them on an AFCI circuit if you like. Newer codes would require it, but if they are not on an AFCI now you do not need to add one just because you are moving the circuit the generator panel.
No, newer "combination AFCI" breaker are NOT combination AFCI/GFCI breakers. It means they detect parallel and series arc faults.
First off. The only way to provide proper "grounding", is to install a grounding conductor from the panel to each outlet. Providing AFCI and GFCI protection to the circuits is helpful, but these devices will not provide "grounding".
If you switch from 2-prong receptacles to 3-prong on these circuits, you should not connect anything to the grounding screw of the receptacles. You should also (technically) install labels at each outlet that read "GFCI protection" and "No Equipment Ground". Though, these labels aren't common in residential situations.
- Replace GFCI breakers with CAFCI breakers and add GFCI receptacles to the first-outlet on each circuit.
This is probably going to be your best bet. In this scenario, the CAFCI breaker provides protection to the entire circuit. The GFCI protection being at the first outlet, means that while the wiring from the panel to this location is not protected, the rest of the circuit is protected.
- Keep GFCI breakers and add AFCI receptacles to the first-outlet on each circuit.
This isn't a terrible option, although the AFCI device will not be protecting the wiring between the panel and the device. Also note that an AFCI device only detects line to ground arcs (parallel arcs), while a CAFCI device detects both line to ground and line to line arcs (parallel and series arcs).
- Replace GFCI breakers with Dual Function AFCI/GFCI breakers.
If you could actually find these (and could afford them), this would probably be your best course of action. Unfortunately, these devices probably don't exists (yet) from most manufacturers.
Best Answer
AFCI's detect patterns of current that usually indicate some sort of electrical problem. Unlike a GFCI which is making sure that current going out = current coming back, AFCI's try to look for electrical usage that would not trip a GFCI but might be something causing an electrical fire. Most code now requires them for bedroom circuits.
The one major drawback for them is that some stuff tricks them into tripping. Often times larger machines with motors, like a vacuum cleaner or power tool can trip them. They are still a good thing to have, just be aware of this limitation