When converting knives to daggers, the knife doesn't disappear and the dagger that shows up in your inventory can't be interacted with at all.
Correction: you can interact with it to craft teeth and wood, etc. You just can't equip it, drop it, etc. I can't eat a carrot I picked up and would suggest rolling back to the previous patch if possible. This patch hasn't been tested enough. It's this type of thing that will cause the Steam forums to combust.
