Hello. Userah did a well job, and let me add to that post.
Carbon dioxide (a gas), is insoluble in mostly water conditions. This is seen, for example, if you leave a cup of water at room temperature, there are bubbles in the water. This is one of the problems that the human body has to overcome, and it does so by "transforming" (if thats the right word in this case) into bicarbonate. You have to understand that CO2 is not simply carried as a gas in the red blood cells. Bicarbonate as a matter of fact is probably the highest molecule in quantity you can find in the body. Let me show you a formula as to what happens:
CO2 + H2O → H2CO3 → H+ + HCO3−.
At the end, once bicarbonate forms, it liberates an H+, which is acidic and as a result, decreases the pH of the environment. The arteries leading to the heart and brain, for instance, do not sense the levels of "CO2" but rather the the drop in pH. If the pH level drops, that means a high amount of CO2 is present. Remember CO2 cannot be carried as a gas but transformed into bicarbonate which liberates an H+. Hope this makes sense.
Thanks.
PS: If you have DAT Destroyer, check out question 216 from bio section. =)