for your case: Fact, inspection tell you it does not meet the current code requirement. The current code requirement is for new installation and modification so you are not required by code to update them to meet current code. So, it is your call.
By the way, the new 2011 code added new requirement for AFCI for new installation or modification (which is not listed in your inspection report). I guess the inspector has not get a chance to know the new requirement yet.