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It's an old question that had the SEO community split* for a long time, however at a recent live questions and answer chat with Google's Matt Cutts and Maile Ohye didn't seem to agree either.

Ohye: Having a site for a long period of time can establish credibility with users, and as a search engine we also want to reflect this type of credibility.

Matt Cutts: In the majority of cases, it actually doesn't matter--we want to return the best information, not just the oldest information.

Ok, I am taking the quotes a little out of context and its to make a point about what they were really saying. They did not really have different opinions as webpronews would like us to believe: http://www.webpronews.com/topnews/2008/11/10/google-answers-some-tricky-questions#comments would suggest

Most think this relates back to the problems in 2006 where many old and established domains abruptly dropped down the rankings giving rise to claims Google had taken the age of the domain out of the algorithm trying to stop mature domain selling. In 2008 it was then assumed to be back as old domains started to performing much better again. Was it due to age? I think not.

My conclusion of this is that Google is trying to get a balance using content, backlinks and traffic to determine a website's authority which can be linked in some respect to domain age. A domain must be around for a while to achieve most of the objectives above, right?

Typical A affects B where it was C all along.