Do you know what symptoms your knee showed that made him think you had arthristis? Was your cartilage thin? Or did you have bone spurs? You should probably get a second opinion, but it really comes down to a quality of life decision. I'm in a similar situation... bone spurs at the age of 33. Is it worth surgery to be able to do the activities you enjoy? What level of activity is enjoyable?
I might also suggest that you look into your form when exercising... bad form can cause excess friction in your knee and grind away your cartilage. You can study running form and video tape yourself, or you can hire a coach/trainer to observe your technique. Losing excess weight will definitely lower the fricion in your knee too, but I have a large frame so it's not an option for me (100kg and 8% body fat). You could also start a low impact activity like swimming or a slower activity with less repetition such as swimming or lifting weights. Just listen to your knee and if it starts to ache then listen to your body and try to change.
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Former collegiate athelete
Microfracture RK, May 2008
ACL reconstruction RK, Nov 2001