"*What is the preferred steel for knives? I know Damascus is the best but what other steels are good? "
That`s a bit like asking how long is a piece of string ? .................
Firstly, damascus isn`t a type of steel as such but a method of construction. Damascus is made from a minimum of two different types of steel or iron folded through multiple laminations.
What determines the best material for a blade is usually reckoned to be the hardest material available but that doesn`t tell the whole story. Stainless steels are invariably harder than carbon steels but can be very difficult to sharpen. Carbon steels take an edge more easily but also lose them more easily. Powdered Steels are often reckoned to be the best but they are used virtually exclusively by Swedish knifemakers......and not many of those. Powdered steel requires specialist techniques and equipment for its manufacture and processing.
Something else that Scandinavian knifemakers have been doing for many years is laminating steels - usually a core of high carbon steel to provide the cutting edge, sandwiched between two layers ( one each side ) of a stainless steel which provides rust, stain and scratch resistance.
Possibly the best blades currently in production are those using an SGPS ( Super Gold Powdered Steel ) core laminated between a sandwich of a specialist stainless steel. About the only company making such blades are the Swedish company Fallkniven :
http://www.fallkniven.com/eng_fallkniven_2007.pdf
In case anyone is feeling particularly generous I`d like a TK3 Black Quince.
The Fallkniven TKs have the best and longest lasting edges of any blade that I`ve ever handled.
The matter of what makes the best material for a handle is also subjective. Ideally the grip should be none slippery but also comfortable. Wrapped string/cord is excellent from the aspect of being very grippy but is pretty hard on the hands/fingers. Raw leather is good - except when wet. Polished leather might look very attractive but provides poor grip. Antler/horn can be very good - but not when polished. Wood and bone are often very attractive but need serrations for grip - hopeless if polished.
I have a Buck Gut hook Zipper-R here at the moment which has a smooth rubber handle - very comfortable and very grippy even when wet.
It has to be said that the matter of the grip material is much more important with a large knife that might get severe use rather than with a pocket folder.