Yoga works on opening the hips and keeping both the the inner and outer quadriceps equally strong, to keep the kneecap in alignment.
The following gives some good pointers to those of you with concerns about your knees. If you want to get right to the solutions, skip to page 3.
http://www.yogajournal.com/health/1161
There is also a little book called "Yoga for healthy knees" by Sandy Blaine which explains in further detail how to heal your knees. This is a great book that I lent out regularly, but finally ended up with someone that I can't remember who it is.