Interesting reply coming from the inspector. Granted I would not disagree with his opinion that replacing a 2 pronged plug with 3-pronged receptacles unless a 3rd wire that ran to an earth ground were ran. But keep in mind that the majority of appliances have KEYed 2-prong plugs... Japanese imported rice maker has one as does my older hair dryer. My recently purchased Honeywell dehumidifier has one as well as my DVD, Sony amp, my Comcast cable box, pc speakers, the cable internet modem, every light table or floor lamp, two pronged plugs. As I look around gosh, the only things that I can think of that have a 3rd ground plug are is my flat panel TV and my older desktop PC. So what is all the hoop la regarding rewiring to 3-pronged... well it is now the code Also, it is possible that the home does not have circuit breakers which is where the risk really is as it is too easy to put the wrong fuse in place and could result in an over loaded circuit.
But if you were considering updating, it could be done in phases. Say all of the kitchen should be 3-pronged as well as any bathroom, garage or outdoor plugs. As a prior electrical engineer, think common sense. If there is any chance that a device or you might come in contact with something that is grounded when handling an ungrounded devise, by all means, get those plugs rewired.
It should not be a deal breaker unless you wish it to be. But as a Boston area buyer as I am guessing you are, do expect that you will run into this often. As for running a new line from the pole, unless you are planning on converting your heating, hot water and kitchen to run electric, personally I think it is a waste of money to run a 200 Amp service. If all you are running is lighting and a few appliances, 60 to 100 amps is a crap load of power. In my home it is all updated electrical, 100 amps, natural gas for cooking and heating/hot water, and I have two wall mounted split AC's (1 @ 9K BTU and another at 15K BTU). Other than those two systems, the only other heavy hitter for load is the vented microwave. Is my home under powered? Not by a long shot!
As for how reasonable are the sellers likely to be. Ask yourself this, has it worked for them. The answer is likely to be yes! So why should they expect to pay for you to upgrade to be a energy hog. Granted they might have been an older couple living with little means and thus were very careful leaving every light on in the home.