I don't know why age is relevant to selection in professional or club cricket. At professional level, either a player is good enough to be in the XI or they aren't. In club cricket you might take into account a few other factors so it might be, for example, batting, bowling, fielding, availability, attitude. Whatever happens, age is irrelevant unless there is no splitting the players based on those criteria.
So Simon Katich being dropped from the Australian team is simply wrong, as a politician there has pointed out in strong terms. We already knew that the Aussie selectors were not up to the job by the fact they've selected 10+ spinners since Warne retired and the fact that Hilditch announced that they'd done a good job after the latest Ashes loss. Selectors can't play the match admittedly, but I don't think anyone would claim that Australia came into The Ashes with a settled side. Not so long ago, Greg Chappell announced that he'd rather give an aging champion one too many chances than one too few, when talking about Mike Hussey. Well he seems to have forgotten that advice now after not even selecting Katich for the top 25 Aussie cricketers. Not the top XI....he's somehow dropped from the top XI to outside the top 25.
It's with the 2013 Ashes in mind, when Katich will be the grand old age of 37. Some players do lose form in their 30s but many others don't. Look at Tendulkar and Laxman. If Australia had a player nipping at Katich's heels to get in then it would be more understandable but they don't. Phil Hughes has been, to date, average.
As an Englishman it's lovely to see Australia get it so wrong. They didn't select their best XI once during the Ashes and they don't look like doing it for the forseeable future. Long may it continue!