I want my cats to be as perfectly pleased with their lots in life as any other cat lover does, so it's easy to have mixed feelings on this subject, but I can think of several arguments against the idea of keeping your pet cat outdoors, or even, in fact, allowing him outside at all:
Domesticated cats are not wild animals. When, as a pet owner, you assume complete responsibility for another life, it is your job to protect the length and quality of that life in the best way you can, for as long as it lasts. The average lifespan for an indoor cat is between 18 and 22 years. For a domestic cat that is kept outdoors: 10 to 14. Indoor cats are less frequently infested with fleas, ticks, and internal parasites. They are less often infected with hemobartonella, feline leukemia, feline infectious perotinitis, feline panleukopenia, feline immunodeficeincy virus, and rabies. (Most of which are contagious, all of which are life threatening, some of which have no cure.)
Indoor cats are less frequently killed or maimed by cars. They get into fewer catfights. They are less frequently harrassed by cat-hating neighbors and ill-tempered little children. Indoor cats almost never turn up with fly eggs, maggots, or botfly larvae boring into and eating their flesh where an injury has been previously sustained. (Outdoor cats, especially in the summer, suffer those charming situations commonly, most especially when they tend to fight with other outdoor cats over issues like food and territory.) Outdoor cats (and dogs) sometimes get stolen and sold to medical research facilities. They are exposed to insecticides, fertilizers, and other chemicals that can be harmful or fatal when inhaled, absorbed through the skin, or ingested. Outdoor cats sometimes freeze in the cold and suffer heat exhaustion or heat stroke in the summer.
Certainly, some cats want to be outside. Certainly some cats enjoy the freedom of being able to roam about at their own discretion, and who can blame them for finding happiness in that? But there are those that say that unfortunately, what someone wants to do is not always what is best for them to do, and that as cat owners, it is our responsibility to make decisions like these for our felines. Many people feel that keeping your kitty indoors unless you can be outside to supervise him is the surest way to keep him safe. It's a part of taking the best care you can of him, just like neutering him, feeding him a balanced diet, changing his litter, making sure his vaccinations are up to date, etc.

"Does that mean its okay to keep retarded humans as pets?" Of course it does. What an excellent analogy!

Seriously, though, domestic dogs and domestic cats are not critters that were snagged out of the wild and put into a cage. They're not animals that ever roamed free in their own right, although that is a beautiful and romantic kind of concept. There was never any such thing as a pack of wild chihuahuas, or a nomadic group of chocolate-point himalayan cats out on the hunt. Certainly a case can be made against the entire concept and tradition of domestication, and therein, if I understand correctly, lies the impetus behind PETA's "Keeping Pets Is A Manipulation Of Nature" argument.