It's a difficult beast. I love it in woven form, and I am really addicted to my silk knit long-sleeved undergarments for winter wear at the office (which is **freezing**). However, I've been disappointed in my own hand-knits made with silk and silk blends.
Silk has a high tensile strength (it's hard to pull apart) but low abrasion strength. Nylon is also a very strong fiber, has very high abrasion resistance in addition to having excellent elasticity, which is why it's so often added to commercially spun sock yarn. I've read that silk is sometimes seen as a strengthener for sock yarn, but in my experience it's a poor choice. Mohair has a better abrasion resistance than silk (also better than wool), so I think it is a better choice for handspinners looking to create good sock yarn - that is, if one does not want to blend in nylon fibers (which are available for spinners also). But really, I wouldn't use silk.
My hand-knit socks from commnercially-spun silk blends have been very disappointing. The silk "frizzes out" on me after some wear, and winds up looking like little grey plastic hairs coming out of the knitting. Looks awful and I won't use this type of stuff anymore - not worth the expensive yarn and my time. I've found the same thing with my silk-blend handspun fibers, I recently knit myself a pair of mittens using a silk/Black Welsh Mountain blend - beautiful on the hank, with a lovely sheen - but after only a few months of wear - and no laundering! - they are showing the same frizzing, at high-abrasion points on the palms and thumbs. Urk.
[silk blend socks, with visible "frizzing"]
[white frizzles on the palm of my handspun mittens]
[....and the thumb is showing it too, going white...]
On the other hand, I've knit a shawl in a 50/50 silk/merino blend that has held up much better. Clearly, it doesn't get the same kind of abrasive wear as socks and mittens. Hence my conclusion is that silk is simply not suited for use in high-abrasion garments. For this reason, I wouldn't use a silk blend in a sweater that I would plan on wearing a lot. In my opinion, silk and silk blends are suited for scarves, hats, and shawls - showcase items that see basically no abrasion.
Pure silk has a fantastic shine and high drape - it has no body to speak of - so pure silk knitting, although beautifully glossy, will sag. On its own, I find it doesn't make nice lace - it's too droopy for my tastes. Alpaca/silk blends are soft and warm, but also very drapey since the alpaca isn't a crisp fiber either. So again, not my first choice for lace...For a really luxurious lace shawl that blocks crisply, I stick to either a fine wool (merino or superfine shetland) or at most a 50/50 silk/wool blend.