My first response to you is to check and comply with the law.
I did a quick serach of the CO Revised Statutes on the net and found several references to knives. The two that I think are most applicable to your question are:
18-12-102 (f) which defines knives in general and I read it to say that a knife is not a knife unless the blade is over 3 1/2: long - but I would not like to have to defend myself in court over that.
Also, 18-12-105 speaks to concealed weapons and indicates that it is illegal to carry a concealed gun or knife.
So there are two issues here. Is a knife with a blade under 3 1/2" a knife, and can you carry any knife concealed? To me, a knife is a knife but apparently in CO if the blade is under 3 1/2" it is not a knife. The definition of concealment differs from area to area. Usually, from my experience, if ANY part of the item is covered with anything, including a sheath, pouch or holster, it could be considered concealed.
I'd check with someone in CO who is familiar with the law and get a more refined answer to all of this.
Generally speaking though, I think if you carry someone with a blade under 3 1/2" (and I would take into consideration the whole blade length, including that inside the handle) you should be ok. You could probably even use a small knife pouch. You might want to consider a horizontal knife pouch that can be worn horizontally on your belt where it will hug up closer and maybe be a little less obvious. But again, check.
I simpify matters on a day to day basis and just carry a pocketknife. In TX though, we can legally carry a knife with a blade up to 5 1/2" long in most cases. But unless I am doing something where I need a blade that long, I stick with the smaller stuff.