For starters, my primary knife, the one that is permanently affixed to my BCD, is only used to free me from entanglements should they occur, and they have. So I prefer a 5 inch knife, with a blade sufficient enough to cut through nearly any non metallic line or net that I may get caught up in. It also must NOT rust in salt water, this is important! (you would be surprised at how many so called rust proof knives are anything but rust proof)
I've found over the years that having it permanently fixed to the left shoulder strap of my BCD, affords me easy access to it when needed, it's easy for my buddy to locate if needed, it's easy for me to verify is there when I gear up, and I can always reach it regardless of orientation or visibility. Anything longer than 5 inches would become unwieldy, be difficult to fit in that location, and just get in the way if I managed to actually fit it there.
If I plan a dive where I may need to pry scallops or other such activity, I'll attach a second larger knife to my BCD, the location isn't important as this is a rare occurrence anyways. (I don't wear a belt, I prefer weight integrated BCD's)
On my twins setup, I also carry a permanent knife fixed to the left shoulder strap of my BP and Wing, but also carry a permanent line cutter fixed to an adjustment strap on my lower right side as a backup in case I drop the knife while using it.
The key is to find a good spot on your equipment setup, and stick to it. Practice removing and replacing the knife under water, and when you feel confident, do it with your eyes closed. Get to know exactly where it is, so you can reach for it at any time without having to look for it. It's a tool that can one day save your life, or maybe just save the dive your on. Either way it's very important to be practiced in using it.