First, a little background. I have been making knives off and on since the mid '80s. I don't know the exact number I've made, but it's more than 200. I use mostly ATS-34 and 154-CM steel and have it heat treated by Paul Bos. I've tried just about everything to put a good edge on the blades.

I have to agree with Stretch. I have 4 or 5 old Japanese water stones. They are just stones, albeit you can get a very fine grit.

Honestly, for the majority of sharpening they aren't worth the hassle. They are really meant to put a polished edge on fine woodworking tools. On a woodworking chisel, or plane, you want as fine and toothless an edge as possible. It needs to clean cut hardwood even on the crossgrain. For a working knife a little bit of tooth to the edge is really a good thing. For example, a razor blade really doesn't cut rope very well, but a blade with a little tooth (though not quite as "sharp" as the razor) will cut rope much faster. Another thing to consider is that the steel in most knife blades won't really get the benefit of a highly polished edge that Japanese water stones will give. A knife blade is a compromise of a steel and temper for holding a good edge and not breaking during most use. When you try to take it to a very fine, polished edge you'll get a burr that can be very difficult to take off.

I use diamond stones for most sharpening. A DMT fine (sometimes I'll go to the very fine and a light strop, it just depends on the blade) will give you an edge that will easily shave arm hair, last reasonably long, and be easy to maintain.

There is a difference in diamond stones. DMT actually seems to cut the steel and last the longest without breaking down. I recently got a 10" combination DMT stone off an Ebay store for $79 plus shipping. The most basic skill, and also the hardest, for putting a good edge to your blade is holding the right angle when sharpening. Once you get that down, the rest is easy. I've used water stones, diamond, sandpaper, and abrasive cardboard wheel and buff to sharpen, but the key to it all is holding the right angle. The diamond stone just makes it go faster.