Let me add my two cents.
In order as I like to walk through the trip that we might just call HMCKT (HM City Knife Tour). Keep in mind that all of these are overpriced compared to Internet stores. The quality is descending in this order:
-Iceberg Army-Navy of Soho at 455 Broadway (walk North on Broadway from Canal Street) ((212) 226-8454). Good selection of factory folders and fixed blades and a very friendly and knowledgable assistant at the knife section many times. It is always fun just to talk a bit to him about knew knives. He is a real knife fan. Nakano might also know him. The store also sells self-defense and army-navy goods as well as lighters and watches.
-Walk North on Broadway (an EMS sport store at Houston on the way with a PC knife selection of few small CRKTs) to Paragon Sports at 867 Broadway (at 18th Street). ((212) 255-8036). Lotsa expensive custom folders (only place I know of in NYC) and some factory folders and few fixed blades. Expensive sport goods, watches and optics but worth to look at if interested in Zeiss, Leica, and Swarowski optics. However, for optics I would visit B&H Photo and Video. The knife selection was somewhat shrinking in the last two years.
-Take a few minutes break at the nearby Union Square Market and enjoy some pastry or fresh organic fruit.
-Walk over to Weiss & Mahoney Army and Navy (142 Fifth Avenue at 19th Street, (212) 675-1915). Ontario machete, few Gerbers and Ka-bar knives, not more else but has some interesting literature (e.g. Everybody's Knife Bible).
-A Barnes & Noble book store and a Sephora cosmetics store are neerby, if interested.
-To see the lower end of the spectrum too, you might walk North on 6th Avenue to ~23th Street to a martial art supply store that sells an eclectic mix of Benchmade, Spydie, CRKT, and questionable quality folders of the Far East as well as martial art goods and karate videos.
I would definitely check out Iceberg and Paragon.
Hope it helps,
HM