I store the knives outside the sheaths because the chemicals used to process leather can cause the blades to discolor, the edges to dull (from oxidation, more commonly called 'rust'), and even cause pitting.

This is with a couple of exceptions. If I kept my Buck General outside the sheath the poor thing would think it had been exiled or worse. (No, I don't normally buy huge knives. I bought this one back in 1968 to kill people. Really. Our National Guard unit had been activated and was going off to Vietnam and my brother Tony and I decided we really needed a good knife "just in case". I paid US $35.00 for it back then....)

The second one I keep in a sheath is my "Air Force Survival Knife," a gift from some veterans I'd worked with. It has a Parkerized blade, so I don't feel bad about it.