I again am bound to nothing more than 3 inch, non-lockable blades, living in the UK but as everyday carry I can recommend the Smith and Wesson stockman knives. I have one with an abalone handle - looks nice and classical with three blades - I find I use one blade and keep the other two factory sharp - you never know when you are going to need something extra sharp.
Living in the USA, you might want to look into getting a Case knife. I have it on good authority that these are quality products but not available where I live.
For Christmas, I bought my dad a Victorinox alox farmer which you should be able to pick up on Amazon within your budget. OK, it is a Swiss army one but it is top quality.
I can also recommend the Wenger sharpener. Remember, more accidents are caused by a blunt blade than a sharp one!
Yeah Section 139 isn't the best thought out law in the UK. Although Patrick's analysis of knife crime in the uk is a little flawed, most of that actual stabbings are committed with kitchen knives by idiots, unfortunately there isn't an effective way to determine who the idiots are before they do something stupid.
I have a Gerber Splice multitool that is big and sharp enough to be useful but falls within the automatically legal category, that I carry everywhere, at all times. If I'm dressed its in my back left pocket. I also have a leatherman charge that I carry most of the time, as with my work I pretty much always have a "good reason".
For a tradtitional looking Pocketknife that is a lock back and 4" or so, I would look at Opinel knives, they are corrosion resistant and while hard to sharpen, once sharpened they hold their edges very well.
I concur. Case's website will educate you very quickly on knife blade patterns too. My favorite it my Case "Razor". It's got a classic look, large and small blades, and because of the design of the main blade can be opened on a pants pocket one handed! It gets a lot of comments from coworkers.
They are kind of hard to find, I found mine on Ebay, but this place has them...
If you're new to knives, I'd recommend Atlanta Cutlery. Great prices, great stuff (although do be careful--they sell a wide range, so some of their stuff is low-quality, but it's just because they sell what's out there--they have plenty of great stuff). Search the web, and you will also find other knife dealers.
As you begin to learn about knives, you'll hear names like Boker (LOVE them), Ka-Bar, Cold Steel, Benchmade, Kershaw, Spyderco, Leatherman, and Gerber, etc. I recommend looking up their web addresses (sorry, don't have them) and ordering catalogs.
You'll learn fast this way!
P.S. I'd recommend a few knives, actually. For me, my main ones are a personal defense knife, a leatherman, a knife for random tool use, etc.
The best places on line that I have found are:
Smoky Mountain knife works http://www.smkw.com/webapp/eCommerce/main_front.jsp
Cold Steel http://www.coldsteel.com/
To follow on from John's post on the previous page:
Looking at your pictures, I can tell you that you have a fairly standard pattern of serrations in a 'combo-edge' blade layout. These serrations should be ok on the Sharpmaker; the small ones will fit the corners of the stones perfectly (I just checked on a knife of mine that seems to have the exact same serration shape and size) and the larger ones should be manageable with some care and patience. Alternatively, buy yourself a standalone round fine crock stick sharpener to go along with the Sharpmaker specifically for those larger serrations if you want to make things easier and maybe a little faster. That's not to say you should rush at this job though!
Regarding knife steels, I should make a point about it in reference to both of your questions. Firstly, judging by the price point the knife you linked to, I should warn you that while you may be able to sharpen your blade to a good edge, it is probably not going to last long before needing resharpening. This is because at that price point, the steel and its heat treatment are unlikely to be particularly hard wearing, resulting in lesser edge retention than the high end steels. This isn't necessarily a bad thing though, I have many cheaper knives myself that I get a lot of use out of and even Swiss Army Knives, which have a great reputation, have a softer steel and lower edge retention. A benefit to these knives is that they sharpen up a lot faster than harder steels will and are perfectly suited to light daily tasks like opening packages and mail, cutting string, peeling fruit (provided the steel is stainless) and so on. I just wanted to give you a heads up in case you found out that your knife dulled soon after sharpening.
As for the other knife dealers' blades that you mention, a high shine isn't necessarily impossible, like I said. Stainless steels will hold their mirror finish a lot longer due to their higher chrome content, and higher carbon steels will dull and develop a patina faster, especially with use. Debates over which steels are best have gone on for about as long as there have been knives and will continue to do so.
A general rule of thumb in knife buying, as in all purchases, is that you get what you pay for. A cheap stainless knife is just as likely to break as a cheap carbon steel blade is, maybe due to imperfections in their forging, maybe because of the metal content or maybe because of a shody heat treatment and temper. Most complaints that I hear about knives failing are down to either poor maintenance when it comes to things like rust, or abuse of the knife by using it improperly or for a task it wasn't designed for like prying. If you pay a reasonable amount of money (and these days it doesn't have to be much more than $20 or so), buy a reputable brand and care for and use your knife properly and respectfully, there will be no problems.
One good example out of many would be the KA-BAR Dozier folding knife series (example here: http://cgi.ebay.com/KA-BAR-4062-Dozier-Folding-Hunting-Knife-NEW-/2...). They are from a good brand, a good knife designer, have an affordable but fairly respectable steel (AUS8 stainless) and cost $20. Of course there are a lot of others out there, but this gives you an idea of the things I am talking about.
Anyway, hopefully that answers your questions a bit better!
The Ka Bar folders are some great knives for the price. I have a couple of the Warthogs, among others, and they serve me daily without a hitch on my job, and they're all around $20 or less...
Same goes for some of the Boker brand knives as well, and for just a bit more, the Kershaws...