Here is a picture of one of my sgians in my hose top

I think the placement is about right, some people will have more showing and some less, I prefer to have about an inch out of the top of the hose.

As to size that depends on the maker of the knife, however the one pictured is 7 1/2" long with a 4" blade, it is a Glen Esk sgian that I purchased from ebay.

I know what you mean about having a real knife, I'm sure many on the forum feel the same way, however if I am wearing a sgian at all it is apt to be a rather dressy occasion where the need for a serviceable blade is going to be slim and none, relegating the sgian to simply a decoration anyway, and that begs the question how much are you willing to spend on a decoration that is mostly hidden in your hose?