In Of Mice and Men, what is 'Old Susy's Place' and what purpose does it serve in the novel? Also, how does Candy react to the gunshot and...

It is Whit who mentions old Susy's place to George:

"If you got idears, you oughtta come in town with us guys tomorra night."

He explains on further enquiry:

"Jus' the usual thing. We go in to old Susy's place. Hell of a nice place. Old Susy's a laugh- always crackin' jokes. Like she says when we come up on the front porch las' Sat'day night. Susy opens the door and then she yells over her shoulder, 'Get yor coats on, girls, here comes the sheriff.' She never talks dirty, neither. Got five girls there."

It is clear that 'old Susy's place' is probably a saloon in town and is a popular hangout for all the ranch hands (and probably others too) which they visit on their days off, as a break from the routine and monotony of hard, physical labour on the ranch. It is here where they can relax and enjoy the convivial atmosphere, talk freely and laugh. They can reunite with other ranch hands and probably gamble and drink. Since the men are essentially lonely, it is an opportunity for them to talk and discuss as well. 

It seems as if 'old Susy' runs a, shall we say, respectable joint, for Whit makes a point of mentioning that she 'never talks dirty' and has 'nice chairs.' His reference to the 'five girls' also makes it obvious that, if they should choose to, the men can also have some bawdy entertainment, they can have, what Whit calls, 'a flop' and sleep over. This is understandable, for none of the men are seemingly married or have girlfriends. A bit of hanky-panky with the girls would be a welcome relief from their frustrations and the chance to make contact with the opposite sex.

The purpose of 'Old Susy's place' in the novel is to show that the men featured in the story need some form of an outlet, as mentioned above. Furthermore, her venue allows the men to bond and form closer friendships, no matter how brief, since they are essentially lonely and migrate from one ranch to the other. The saloon provides them with some sense of belonging, even though this might just be fleeting. It anchors them temporarily for it would be here that they are with their own kind - other men who think, feel and do as they. It is therefore not just a place of entertainment, but much more. The men need such a place or else they would, essentially as drifters, suffer even more disparagement and depression.

Whit states that it costs about two dollars fifty to spend time at 'old Susy's'. Some of the ranch hands might not care much about being thrifty when they visit the establishment and literally, 'let it all hang out.' One cannot blame them if one considers their prosaic lives. As Whit puts it,

"Well, a guy got to have some fun sometime,"

Candy's reaction:

A shot sounded in the distance. The men looked quickly at the old man. Every head turned toward him.
For a moment he continued to stare at the ceiling. Then he rolled slowly over and faced the wall and lay silent.

This is probably one of the most tense, dramatic and saddest moments in the novel. Candy is obviously overwhelmed by the death of his beloved old dog. He felt defeated since Carlson had coerced him into allowing him to shoot the dog. He had a close attachment to the animal since he had raised it from a pup. The dog was his friend, a companion, something he cared about and could nurture.

The dog was an antidote to his loneliness and he could not bear to know that it had died such an ignominious death. Candy wanted the dog to die naturally, but he had no support from the other men when Carlson aggressively insisted that he allow him to kill it. He could not even depend on Slim as a last resort. it is a truly tragic moment and Candy's reaction clearly depicts his devastation: his companion had been executed, when all he wanted was for it was to die a dignified, natural death.

Candy remained in this quiet position until Carlson returned and started cleaning the gun. 

When the ejector snapped, Candy turned over and looked for a moment at the gun before he turned back to the wall again.

One can only imagine the bitterness, resentment and guilt Candy might have been experiencing at that moment. He might have felt some kind of vengeance boiling up in him and may have had thoughts about using the gun against Carlson, but because of his obviously apathetic and gentle nature, could not, and would not, do anything.