Are there any sports/exercises recommended for a person who has arthritis in the knees?

Many exercises. With a diagnosis of arthritis in the knees, there are still many exercise that can be performed. These include swimming, water aerobics, elliptical trainer, stairmaster/stairclimber, and even walking on a treadmill. The specific exercise will depend on the severity of symptoms and aggravating activities.
Avoid trauma. Most contact sports, basketball, running, jumping or excluded since they increase the "tonnage" on your knees. A better exercise is bicycling, but with the seat properly gih, so you don't grind your knee caps. Make sure whatever activity suits you, have good shoes. Depending whether you are genu varus (toward bowleg), or genu valgus (knock knee), extremes of either may tilt you toward orthotics!