How to Colorize an Old Black and White Photo in Photoshop

I've seen it a few times on Reddit, where someone will show how they took an old black and white photo that has bent corners and is all scratched and make it look new.  Here's a really good example of what i mean.

I thought i'd give it a try.  Here was the image that i started with, a picture of my grandpa when he was in the Marines.

 I set the original photograph on a dark piece of foam, put that on the ground in front of a window, and took a picture of the photograph with my camera.  I always think that natural sunlight turns out looking a lot better then using any indoor light.

To edit the photo i used Photoshop 6.  It's actually not super difficult, i really only used a few different tools.  You can see that the original photo had some creases in it, so i decided to try and fix that first.  For that i used the Clone and Spot Healing tool.  They look at the surrounding area and fill in the area selected.  That worked really well and only took about 10 minutes.  Here's what it looked like after that process.

Now for the tedious detail part of the job.  For every area you want to color, you have to trace it out and isolate it on its own individual layer.  I started with the background, so i had to trace it out, copy, paste to new layer, then change the tint to a blue. 

It's actually slightly more complicated then i am saying.  You have to do a lot of zooming and panning to get just the area you want selected.  Also layering gets a little tricky, having the things you want to show up on the top of the layer manager.  Here's a screenshot of what it looked like while working on it in Photoshop.

Several layers later i had the shirt, hat and skin about the colors i thought they should be.  With the blue background i only had to adjust the tint, but with these layers i changed some other things like contrast, saturation, and color intensity.

Here's the finished product on the right, compared to the original on the left.  It's not perfect, but pretty good for a first try.

If you want to try it, you definitely don't need a ton of Photoshop skills.  But it does take a lot of time tracing everything out.  Maybe there's a quicker way of selecting the areas, but i couldn't find one.