I leave nearby and there's nothing of note in town, not even a decent surplus army-navy. (on the other hand if you're into the preppy look, Princeton has plenty of shops including a high end kitchen gadget place that technically has dozens of knives, but of the sort that rarely leave the kitchen)
Let's see:a WalMart and Dick's Sporting Goods outside of town off Rte 1, an Eastern Mountain Sports off Rte 1 and if I recall correctly there's a dive shop or two up Rte 206 towards Somerville, but that's about it other than a police supply place outside of Trenton, Samzie's...I don't know if they sell knives but they did have 5.11 stuff. They all may have something or other, mainly production and utility knives.
Best bet if you want to take a trip:further up 206, maybe 45 minutes to an hour, there is a true gear store that had some good quality knives plus other fun stuff last time I checked: Cigars and Fire Trucks in Bernardsville as seen here:
http://www.cigarsandfiretrucks.com/location.shtml
It's a drive but Harry's Army-Navy and the Sportsmans Den (if I remember the name correctly) are in Bordentown on Rte 130, about a half hour away. Haven't been there in a while but Harry's had an excellent selection of knives and SD wasn't bad, either. Guns and gear as well. Fun stores!
Down Rte 130 south there's a flea market near Cinnaminson that has an actual knife shop, but nothing custom or high end. Plenty of swords and lower end things, though. Also a martial arts/ paintball stall in there as well, plus a remarkably good bookstore and a back date magazine place if you're into that sort of thing (Columbus Farmer's Market has a back date magazine place as well). Figure on at least 45 minutes from Princeton proper, though. Once you're there you're pretty close to Philly, if that helps.
Around here you can also wait for gun shows in PA. There's several venues from Philly area to Harrisburg to Allentown with two to four shows each per year, and staffed with several good vendors who will have a large range of Spydercos, Benchmades, Cold Steel and even the occasional Chris Reeve item or two. Plus I'm seeing Blind Horse Knives at King of Prussia's show and one or two other local makers here and there that also have some very interesting items.
Once upon a time there was a neat little knife shop of the non-Hoffritz sort in the Toms River area--I'm thinking Hooper Avenue but I can't recall the name or the exact venue. Something-Creek, and it was a nice store...has to be gone 5 years plus by now. There also used to be one or two Herder's Cutlery places in PA malls, and possibly even in Woodbridge NJ, but like the Remington store in Franklin Mills they also seem to have left the scene ages ago. Ray's in Plainfield was great, but they shut down in 2009, I think, but there's Effinger's in Bound Brook, a neat old style sporting goods store that caters to hunters. But it's getting a little far afield from Princeton.