yes a GFCI will work on an ungrounded system. a GFCI outlet has a current monitor in it to insure that current on the hot is same as on nuetral. if more current on hot it is not returning through neutral so it has found another way to ground so GFCI will interrupt the circuit to keep a person from being electrocuted
I would also suggest you consider rewiring your house and put in a grounded system with a breaker box. The old 2 wire system is still funcional but I do not trust them they are old and all the wiring wasnt neccessarly done by a knowing person It can make for a fire waiting to happen.