NeilG - how do you know this circuit is not grounded? Sorry, I don't know your skill level and reason for asking.
Did you test to see if this circuit is grounded? If so how? If there is a metal box and you don't see a ground wire the box can still be grounded maybe.
Anyway, whether the circuit is grounded or not the switch should still function correctly.
Installing a GFCI upstream of this switch or light fixture box (where ever the power is coming from) won't hurt it and will provide added personal safety especially if the circuit is in fact not grounded. The gfci should not affect the functionality of the switch.