Fully featured photo restoration software like Photoshop - and "GIMP" - with practice can help you perform miracles with damaged images
How to fix an old photo in Photoshop – image adjustments: tone, contrast, saturation etc.
Restore old photos in Photoshop Elements with this video tutorial and a free action. This would make grandma very happy.... http://www.texaschicksblogsandpics.com/photoshop-elements-free-action-video-tutorial-restore-colorize-a-scanned-photo/
Photo Restoration Dust and Scratches Removal(Tutorial)