First of all, I think most of us would agree that a knife is the epitome of functional art. But "function" is matter of individual need, and "art" is a matter of individual taste.
At the extreme ends, a knife can be so functional that it is ugly, and a knife can be so artistic that it is useless. There is a very broad area in between, and the best knives are made with the best balance between the two.
Personally, I do not care for a lot of embellishment, be it scrimshaw, engraving or carving. But, I would never deny the art and skill that go into pieces that have these features.
Thirty-odd years ago when I was first learning about the wonders of customs and handmades, a gentleman named Jim Pugh was doing amazing things with knives that involved a lot of gold and beautiful carvings. I have no doubt that I could skin a lion with one of his knives that had a lion carved into it's pommel, guard and blade, but I probably wouldn't.
As to whether or not such embellishments are "cheesy"- I would say that it is purely a reflection of the skill of the maker. A very plain knife can look cheesy- without any carving- if it is made poorly.