Here's the entire conversation between the Architect and Neo in text form. It should lay a lot of rumours to rest.

The Full Conversation between the Architect and Neo *Text Form*
The Architect - Hello, Neo.

Neo - Who are you?

The Architect - I am the Architect. I created the matrix. Ive been waiting for you. You have many questions, and although the process has altered your consciousness, you remain irrevocably human. Ergo, some of my answers you will understand, and some of them you will not. Concordantly, while your first question may be the most pertinent, you may or may not realize it is also irrelevant.

Neo - Why am I here?

The Architect - Your life is the sum of a remainder of an unbalanced equation inherent to the programming of the matrix. You are the eventuality of an anomaly, which despite my sincerest efforts I have been unable to eliminate from what is otherwise a harmony of mathematical precision. While it remains a burden to sedulously avoid it, it is not unexpected, and thus not beyond a measure of control. Which has led you, inexorably, here.

Neo - You haven't answered my question.

The Architect - Quite right. Interesting. That was quicker than the others.

*The responses of the other Ones appear on the monitors: "Others? What others? How many? Answer me!"*
(I dont agree with whoever wrote this, I think that the monitors are showing Neo's possible answers, possible hinting that there are alternatives to his actions (and hence the choice issue comes up). Also, the camera zooms in on Neo's current response, showing the choice made.)

The Architect - The matrix is older than you know. I prefer counting from the emergence of one integral anomaly to the emergence of the next, in which case this is the sixth version.

*Again, the responses of the other Ones appear on the monitors: "Five versions? Three? I've been lied too. This is bull****."*

Neo: There are only two possible explanations: either no one told me, or no one knows.

The Architect - Precisely. As you are undoubtedly gathering, the anomaly's systemic, creating fluctuations in even the most simplistic equations.

*Once again, the responses of the other Ones appear on the monitors: "You can't control me! **** you! I'm going to kill you! You can't make me do anything!*

Neo - Choice. The problem is choice.

*The scene cuts to Trinity fighting an agent, and then back to the Architects room*

The Architect - The first matrix I designed was quite naturally perfect, it was a work of art, flawless, sublime. A triumph equaled only by its monumental failure. The inevitability of its doom is as apparent to me now as a consequence of the imperfection inherent in every human being, thus I redesigned it based on your history to more accurately reflect the varying grotesqueries of your nature. However, I was again frustrated by failure. I have since come to understand that the answer eluded me because it required a lesser mind, or perhaps a mind less bound by the parameters of perfection. Thus, the answer was stumbled upon by another, an intuitive program, initially created to investigate certain aspects of the human psyche. If I am the father of the matrix, she would undoubtedly be its mother.

Neo - The Oracle.

The Architect - Please. As I was saying, she stumbled upon a solution whereby nearly 99.9% of all test subjects accepted the program, as long as they were given a choice, even if they were only aware of the choice at a near unconscious level. While this answer functioned, it was obviously fundamentally flawed, thus creating the otherwise contradictory systemic anomaly, that if left unchecked might threaten the system itself. Ergo, those that refused the program, while a minority, if unchecked, would constitute an escalating probability of disaster.

Neo - This is about Zion.

The Architect - You are here because Zion is about to be destroyed. Its every living inhabitant terminated, its entire existence eradicated.

Neo - Bull****.

*The responses of the other Ones appear on the monitors: "Bull****!"*

The Architect - Denial is the most predictable of all human responses. But, rest assured, this will be the sixth time we have destroyed it, and we have become exceedingly efficient at it.

*Scene cuts to Trinity fighting an agent, and then back to the Architects room.*

The Architect - The function of the One is now to return to the source, allowing a temporary dissemination of the code you carry, reinserting the prime program. After which you will be required to select from the matrix 23 individuals, 16 female, 7 male, to rebuild Zion. Failure to comply with this process will result in a cataclysmic system crash killing everyone connected to the matrix, which coupled with the extermination of Zion will ultimately result in the extinction of the entire human race.

Neo - You won't let it happen, you cant. You need human beings to survive.

The Architect - There are levels of survival we are prepared to accept. However, the relevant issue is whether or not you are ready to accept the responsibility for the death of every human being in this world.

*The Architect presses a button on a pen that he is holding, and images of people from all over the matrix appear on the monitors*

The Architect - It is interesting reading your reactions. Your five predecessors were by design based on a similar predication, a contingent affirmation that was meant to create a profound attachment to the rest of your species, facilitating the function of the one. While the others experienced this in a very general way, your experience is far more specific. Vis-a-vis, love.

*Images of Trinity fighting the agent from Neos dream appear on the monitors*

Neo - Trinity.

The Architect - Apropos, she entered the matrix to save your life at the cost of her own.

Neo - No!

The Architect - Which brings us at last to the moment of truth, wherein the fundamental flaw is ultimately expressed, and the anomaly revealed as both beginning, and end. There are two doors. The door to your right leads to the source, and the salvation of Zion. The door to the left leads back to the matrix, to her, and to the end of your species. As you adequately put, the problem is choice. But we already know what you're going to do, don't we? Already I can see the chain reaction, the chemical precursors that signal the onset of emotion, designed specifically to overwhelm logic, and reason. An emotion that is already blinding you from the simple, and obvious truth: she is going to die, and there is nothing that you can do to stop it.

*Neo walks to the door on his left*

The Architect - Humph. Hope, it is the quintessential human delusion, simultaneously the source of your greatest strength, and your greatest weakness.

Neo - If I were you, I would hope that we don't meet again.

The Architect - We won't.

Points you should take from this thing.

1.The anamoly they are talking about are the people in Zion.
2.They are the 0.1 percent of the human race that doesn't accept the revised matrix they are using now.
3. Number 2 isn't a very big problem because they can keep it under control.
4. Neo was created by the machine to study why Number 2 happens, hence his knowledge, emotion and thoughts combined with the oracle's studies of the human psyche are compiled together and sent back to the source for the machine to try to perfect the matrix so that the acceptance rate for matrix becomes 100%.
5. Oracle came up with the theory that the current matrix would achieve a very high acceptance rate if the people were given the power of choice, even if it were on a subconcious level. Like I mentioned earlier, they managed a 99.9% acceptance rate with the current matrix as opposed to the first one where very few accepted and "entire crops were lost".
6. Oracle isn't good or bad, she's just a program doing what she's designed to do which is to help to find The One and get him to the source.
7. Although 0.1% is very low, eventually they add up so the zion needs to purged and matrix needs to be reloaded so to speak, hence the name I guess.
8. All the above has happened 5 times and the matrix was reset 5 times. But this time(6th) Neo chose to risk everything instead of resetting the Matrix. Presumably because he is in love with Trinity.

Feel free to discuss.