I said most likely.
On the other hand, Vash has been able to redirect the blast before. A glancing blow by the Angel Arm is still going to be severely devestating and not destroy the entire village.
Knives getting the hell out of Dodge when he sees the Angel Arm come out seems pretty likely, too, since he's not dead, and all... meaning the ninjas are going to come up on the guy who just destroyed a portion of their village all by himself, for seemingly no reason. That would be plenty enough reason to seal him, especially if he tries to get away/fight back (which is very likely, since he's going to want to go after Knives).
Besides, Vash is just more interesting a person to have sealed inside Naruto.
You may think Knives would be easier to work with, but I think they'd be equally easy enough to achieve. At that point it comes down to who would be more interesting, and Knives just isn't enough of a character to make the story interesting. Vash, however, is.