What's the best way to scan gray scale photo's for archiving? Gray scale or
colour? I believe gray has only 255 shades?
That depends on your purpose.
If you want to represent the image contents only, you scan it in
greyscale, optimize the distribution of the greylevels (black and
white points, distribution curve) in the scanning software and save
the result as lossless compressed eight bit PNG.
If you want to save artistic effects or the condition of the image the
day when you decided to stop aging and decay, you should scan it as
color image - following all rules for archiving color images.
Michael