I've used Photo Suite III for sometime. I've been able to work on old black and white photos quite successfully. I'm only an amateur but got some impressive results. For £7.99 I would go for it (I paid over £30 a couple of years ago)
Pretty well any photo editing software will have the necessary tools for this relatively simple job. I presume you have a scanner (otherwise how are you going to copy the old photos?!). Did your scanner not come with a simple photo editing package? Most of them do. Otherwise - do you read computer magazines? if so (and assuming you keep the cover CD's) root around in your old cover CD collection, and I reckon you're bound to find a photoediting package on one of them.
I use Paitn shop Pro 8. I know it's not free but it is not extortionate like PhotoShop. I bought mine through Amazon for about £40 IIRC. It does absolutely everything that I could possibly want and much more than that. /there is plenty of backup from the SW house (JASC) and a forum for discussion.
Try Gimp for Windows. It is a very powerful program used mainly on Linux but has been ported to Windows. It is as powerful as Photoshop. It has a rather quirky interface but, when you get used to it, it will do pretty well anything you want. Download it from: click here
Its homepage is : click here which is useful for reference
I have restored dozens of old family photos dating back to c. 1880 with total success using Paint Shop Pro. Originally I used PSP 5 which was quite adequate. Now I use version 7 which is still two grades below the current issue but it is superb. I believe I remember PCA offering a limited edition on a disc some while back. Whatever, if you are serious about the work you want to do, go for the best you can afford as this will allow you to progress to other editing tasks. The only competition to my mind is Adobe Photoshop which is a lot more expensive but won't do much more for basic correction work. Photoshop Elements is readily available and will also do the job perfectly. Good luck - its fascinating work!