You can see the difference between nice lenses and crappy ones as well as larger image processors. You're on the right track with camera and lighting.
If your photos are coming out blury and you're using all auto settings then you've probably got movement somewhere or you're focusing on the wrong object. Most likely it's movement since you probably get a clear lock before you take the photo. You want to make sure your shutter speed is at least 1/60th of a second unless you're using a tripod. A tripod with your knives should allow you to take perfectly still pictures at any shutter speed.
If your photos are grainy and just not good quality then you need to change your ISO setting on the camera (if it's digital) or the film speed that you're using to a lower one. I've found that digital cameras have trouble "properly" mimicking high-speed ISO settings and (to my eye) are far grainier than the equivalent film speed starting at around 400.
A knife sized light tent can be had for $20-$40. This will help soften and diffuse your light and get nice photos of the knife. If you don't have one already it's a worthwhile investment, especially considering the cost of your other equipment.
I'm not a professional photographer or anything, these are just my observations.