There's an addon called "fake knife" which has worked on again and off again throughout the 2.5 versions. It seems similar to the 2.49 knife. Currently it appears to be working(in blender v2.59).

  I recommend downloading a build from Graphicall.org which has addons_contrib included, as you might find more utilities useful to you therein as well.

 

 For just the fake knife addon:

http://wiki.blender.org/index.php/Extensions:2.5/Py/Scripts/Modeling/Fake_Knife

 

hope that helps