I have a room that has some really ugly cheap panelling on the walls. I want to rip it out & replace with drywall. While I'm at it, I'd like to add soundproofing insulation between rooms & thermal insulation on the outside walls. 

However, the house has knob & tube wiring. Is it safe to leave the wiring alone for this project? (Obviously if something must be done, doing it when the wall is open is best.)