Somerset's switchblade is one of the first items in the movie that we see. It's as integral to Somerset's daily attire as his tie or his gun. He doesn't use the blade to cut perps, but it does get a lot of use during the film.
We see him use the knife to cut crime scene tape and the brown paper backing off a painting to hunt for clues. After he shatters his precious metronome, he throws his switchblade at a dartboard for some meditative target practice. And finally, he uses the switchblade to open the box with Tracy's head in it. Yikes.
The switchblade is a lot like Somerset himself. A little reserved but practical. Is there a downside to the knife—and, therefore, to Somerset's personality? We could argue that if he didn't have the knife, he might not have cut open the box at the end, instead waiting for the bomb squad.
In this way, the knife symbolizes the downside to Somerset's "this man is an island" way of living. His knife—a useful tool that means he's not dependent on anyone—allows him to forge his own way in this investigation. This lone wolf attitude is indirectly responsible for John Doe's murder and Mills becoming a murderer.