Stem cell populations in the body live in stem cell niches, each different type of stem cell with its own niche. The niche supplies the necessary environment and many of the cues that direct stem cell activity, and this is why changes in the niche are possibly more important than changes in stem cells themselves when it comes to the decline of stem cell activity with aging. That decline causes a sort of corrosion of your tissues as stem cells increasingly fail to keep up with maintenance and repair - but the evidence to date suggests that those stem cells are generally still capable of doing their jobs, provided they are given their marching orders:

Surprisingly, this age-related decline in stem cell potency may be somewhat reversible. A team of Howard Hughes Medical Institute (HHMI) researchers has found that in old mice, a several-week exposure to the blood of young mice causes their bone marrow stem cells to act "young" again. ... The researchers have not yet isolated the blood-borne factors that can switch old stem cells back to a more youthful state, but their results are consistent with other recent studies that show stem-cell aging may be reversible.

Thus we have to look at the aging of stem cells in the context of the niche and the rest of the body, and we have to look at regenerative medicine for the old in a holistic way. While throwing stem cells at every problem seems to be fairly beneficial, based on the successes to date in first generation stem cell transplant therapies, it isn't enough in and of itself. Putting good stem cells into an age-damaged environment is not using them to their best effect.

But this all comes back to the question of just what a stem cell niche is anyway, and why the changes of aging change the way in which stem cells act within the body. Here is a good open access paper that provides an introduction to the niche and its importance, with some examples of various different stem cell and niche types throughout the body:

What does the concept of the stem cell niche really mean today?

Ideas about stem cells, and how they behave, have been undergoing a lot of change in recent years, thanks to developments in visualizing, monitoring, and manipulating cells and tissues. ... the detailed mechanisms underlying niche function are extremely varied. Niches may be composed of cells, or cells together with extracellular structures such as the extracellular matrix (ECM). They may be sources of secreted or cell surface factors [that] control stem cell renewal, maintenance, or survival. They may consist of just a single cell type, or a whole host of interacting cells. They may derive from cells outside the stem cell's lineage, or they may derive primarily from the stem cell's own descendents. In general, there seems to be much more consensus about the fact that stem cells invariably need niches than about the specific mechanisms by which niches do their jobs.

Why should a stem cell need a special environment? This is a pertinent question, given that none of the elementary processes that stem cells rely upon - growing, dividing, differentiating - are unique to stem cells. We can easily imagine three classes of answers:

One possibility is that there are demands placed on stem cells that necessitate special support for viability. For example, the need, imposed by cellular immortality, to minimize the accumulation of genetic damage, may drive stem cells to adopt a peculiar metabolic state that might force them to rely upon other cells nearby for sustenance. This 'nutritive' function of the niche remains a formal possibility, but in most systems few experimental data in support of it have so far emerged.

A second possibility is that niches are agents of feedback control. Recent studies tell us that stem cell pools are not slavishly maintained at a constant size by fixed, asymmetric divisions, but are usually capable of expanding or contracting and, even under homeostatic conditions, may face large stochastic fluctuations. The varied growth factors and cell surface molecules produced by niche cells may share the common goal of controlling stem cell pools. If this is the case, then the niche might best be thought of not simply as an environment conducive to stem cell functioning, but as an apparatus for communicating information about the state of a tissue back to the stem cells that maintain it. An important question to address would then be how niches obtain and relay such information.

A third possibility is that niches are instruments of coordination among tissue compartments. Some of the best evidence for this view comes from work on the hair follicle niche ... There, stem and progenitor cells responsible for maintenance of epidermis, pigmentation, hair, and connective and adipose tissue all interact in close proximity. A need to achieve tight coordination among these different cell populations may be the overriding reason for complex organization of this niche. The possibility that other niches may also be hubs of inter-lineage coordination is certainly an idea worth investigating.

The best case scenario for the future is that enacting the Strategies for Engineered Negligible Senescence to repair the known forms of cellular and molecular damage that occur with aging will cause stem cell niches to largely take care of themselves. In other words, under this scenario it turns out that the second possibility outlined in the quote above is the principal role for niches, and thus repairing the biological damage of aging in the body will cause the command and control mechanisms for stem cell populations to return to a youthful state.