I free dive to spear fish and stuff, I've worn a scuba tank once and that was in a pool. They're cool, but not my style.
Anyway, I just use the same thing underwater that I use on land. I just make sure to clean and dry it thoroughly when I'm done. I have even dived with 1095. It doesn't immediately turn into a pile of rust, contrary to popular belief. Sure, you may have some staining, but if you really use your carbon steel blades, they'll already be stained.
Of course, stainless is preferable, just not 316.
Everybody says that only stupid divers use large knives, well I've heard the same thing about inexperienced woodsmen. Personaly, I think the people who propose this things are the ones who are stupid and inexperienced. If you don't like large knives, don't use one. If you have a use for large knives, use them.
As far as being attacked by sea creatures go, yeah it's actualy happened to me a lot. And the were mostly stupid little bait fish. The most viscious fish in the water is the freshwater bream. I've been nipped almost to death by those things. The truly dangerous sea creatures tend to not be all that hostile.
Still, you won't find me swimming with sharks. I fell in the water while trying to dispatch a good sized blue when fishing once. Scared the heck out of me. Fortunately, I was granted the the power of flight by a merciful God and managed to catapult out of the ocean and back into my boat before anything happened.