Arc-Fault Circuit Interrupter (AFCI)
An arc-fault circuit interruption device is designed to detect dangerous arcing within the protected circuit, and open (turn off) the circuit to prevent damage caused by the arcing. It does this using special circuitry to analyse the electrical characteristics of the circuit, looking for characteristics that match specific pre-programmed values. If the AFCI detects suspicious goings on, it opens the circuit.
AFCI breakers are typically combination devices, meaning they also provide similar overcurrent and short-circuit protection to a standard breaker.
Installing a combination AFCI breaker on a circuit containing knob and tube wiring would be a great idea, and could potentially prevent a fire.
Ground-Fault Circuit Interrupter (GFCI)
Ground-fault circuit interruption devices are designed to detect ground-faults, and open (turn off) the circuit when a ground-fault is detected. They work by using a current transformer (CT) to detect current imbalances between the ungrounded (hot), and grounded (neutral) conductors of a circuit. This blog entry might help you understand how GFCI devices work.
GFCI breakers are typically combination devices, meaning they also provide similar overcurrent and short-circuit protection to a standard breaker.
Installing a GFCI breaker on a circuit containing knob and tube wiring, probably won't provide any benefit. GFCI devices are designed to prevent electrocution, not to protect the wiring.
Combination AFCI GFCI Circuit Breakers
Circuit breakers that provide AFCI, GFCI, overload, and overcurrent protection are becoming more widely available. If you can find them for your panel (and afford therm), these would be the best option.
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.
Best Answer
AFCI is required, but not GFCI, modulo local amendments
Assuming that your jurisdiction doesn't amend this, the requirements for smoke detectors/alarms in bedrooms (NFPA 72, NFPA 101, IRC/IBC) overlap with the AFCI requirement for bedroom outlets (both receptacles and lighting outlets) to force the smoke alarms onto an AFCI protected circuit under all recent NEC editions.
There are two ways I've seen to deal with this: either you can put in a residential alarm system with system smoke/CO detectors (and get the brains of a burglar alarm from the deal), which means you get to take advantage of the 760.41(B) requirement that fire alarm panels not be on AFCI or GFCI, or you put the smokes on the same circuit as frequently used lighting loads, so that breaker trips are troubleshot promptly.
As an aside, NFPA 72 29.9.4 point 5 requires smoke alarms that are AFCI or GFCI protected to have battery backup power. If the 7 days of standby + 4 minutes of alarm backup power requirement given for dual-powered smoke alarms is insufficient, such as if you're dealing with a "snowbird" situation in Florida, then it's best to go to an alarm panel. (You'd probably want the alarm panel anyway, as local smoke alarms are going to do you no good when it's July and the house is vacant and neighborless to begin with!)