I think varnish is better for very old floors. Some have stains incorporated right in them. If you buy varnish OR poly, DON'T buy bargain material!
You said the flooring is 1920's Oak but are you really saying the house is 1920's or the flooring is REALLY 1920's? If it's the latter, I'd still go with varnish.
Also, as Henry says, the direction you go w/the sander should be assessed by a pro first! And lastly, you might want to get an estimate to have the work done professionally because you might find the 'grief' in doing it yourself is worth having a pro do it.