Nitrates and nitrites cause a lot of consumer confusion. They're naturally occurring molecules in vegetables.
Several foods are sources of nitrates (salts) which are a normal part of the diet as they occur naturally and they're produced by a number of species of nitrifying bacteria. Only excessive levels can cause any health problems (methemoglobinemia).
Sodium nitrite and potassium nitrite (salts) are added to cured and processed meats as reducing agent (opposite of oxidation agent) to delay spoilage and pathogenic bacteria growth and to preserve its color.
Historically nitrite and nitrate were considered harmful food additives where they were considered carcinogenic, however recent research has change our ideas about health effects of both nitrite and nitrate and newly studies show no association between its intake and stomach or ovarian cancer. Further more, they're now considered as essential nutrients for cardiovascular health by promoting nitric oxide (NO) production.2010, 2012
However under certain conditions, nitrite can form nitrosamines, molecules that cause cancer in lab animals. This happens when nitrites are exposed to high heat during cooking or strongly acidic conditions (stomach acids), they could form carcinogenic nitrosamines2006, 2007, wiki. As the result the U.S. Department of Agriculture established the safety limits on the amount of nitrites used in meat products in order to decrease cancer risk in the population. This could indicate that nitrosamines may be carcinogenic in humans.
Although available evidence supports a positive association between nitrite and nitrosamine intake and gastric cancer (GC) and oesophageal cancer (OC), they're not conclusive2006, wiki.
The recent research suggests that nitrite preservatives have "been found to be safe"2012. However it doesn't mean processed meats are healthy.