Oxygen and Oxidative Stress

Yeah, you are right. Oxygen which is a life giving gas, is needed by all living things to survive. But Oxygen causes Oxidation and free radicals, and body must continously produce Anti-oxidants to undo the damage done by oxidation.

Oxidation and Reduction are both happening in our bodies, but if we overload the body with plenty of oxidants, chances of damage to our cells increases. 

Aging is caused when the oxidative stress of our body increases and body cannot get enough anti-oxidants to fight the oxidative stress. fact is, we are all slowly oxidizing/ rusting away. the result is  wrinkles, gray hair, weak eyesight, just to name a few symtoms.

Quoting from Anti-Oxidants article.
http://en.wikipedia.org/wiki/Antioxidant

"The oxidative challenge in biology

The reactive oxygen species produced in cells include hydrogen peroxide (H₂O₂), hypochlorous acid (HOCl), and free radicals such as the hydroxyl radical (·OH) and the superoxide anion (O₂⁻).^[12] The hydroxyl radical is particularly unstable and will react rapidly and non-specifically with most biological molecules. This species is produced from hydrogen peroxide in metal-catalyzed redox reactions such as the Fenton reaction.^[13] These oxidants can damage cells by starting chemical chain reactions such as lipid peroxidation, or by oxidizing DNA or proteins.^[9] Damage to DNA can cause mutations and possibly cancer, if not reversed by DNA repair mechanisms,^[14][15] while damage to proteins causes enzyme inhibition, denaturation and protein degradation.^["