Ran, a 297*470 pixels image is way too smal to get a descent result. The fact that it's a jpeg only makes things worse (artifacts). Ask them for an uncompressed image (TIFF for example) at the highest resolution as possible.
Important first is to correct the highlights, mid tones and shadows and 'levels' is a good tool for that.
The background should be easy to smooth out, but keep some very slight noise in it too make it look natural.
Smoothing the skin can be done with the blur tool (small soft brush, 10-20%) on a separate layer (select 'Use All Layers' in option bar). Darker areas and highlights can be adjusted using the dodge and burn tool (10%) on a 50% gray layer that is set to blending mode overlay (on top of the original image). Important is to make sure that you have contrast and detail in the eyes, the most important part of any portrait. Bringing out the darker areas can be done with curves, but in this particular image I prefer to selectively burn the darker areas with a 10%, soft dodge 'burn' and the tool set to "shadows".
All adjustments should be done non-destructive! Make all your corrections on separate layers if possible. Don't use the clone tool on the original, but clone on a new layer with "Use All Layers" turned on in the option bar.
I would convert the final result to black and white and add sepia tone if the owner prefers this.
Slightly sharpen the final result. You might consider to sharpen only those areas that are really important by using a mask.
To sum up some important aspects of success retouching;[list][*]use large images, uncompressed[*]plan ahead; try to figure out what kind of steps you need to correct a particular image BEFORE you begin[*]work as much non-destructive as possible[*]be patient; in most cases it's better to go over an area a few times, to use a smaller brush or to use more than one tool, instead of trying to fix things with one stroke or a single click on the mouse button[*]try to work on selective areas if needed. For example; removing noise in a face doesn't mean you should remove noise in the complete image[*]avoid to go over the edge with your tools; often 'less' is better. Going too far might make your image look artificial. Don't try to make a 1900 photograph look like it was taken 2 years ago, because that might also have a negative effect on the final result[/list:u]
If you need to know more about retouching;[list][*]Book: Photoshop Restoration & Retouching by Katrin Eismann[*]Book: Photoshop Artistry[*]Web site:
http://www.retouchpro.com/[/list:u]Good luck! 8))
Making image look better 
Linear Mode
