I play Skylander with my kids some. They are a bit different in style and challenge. Skylander really isn't challenging (though I can't remember if there is a difficulty setting). It does have a lot of characters (if you buy them for insane prices). It feels kind of slower paced than Knack. Graphically it is very pleasing and a very polished game. I think each character has 3 moves, maybe a couple of move and then you upgrade things, never ending collection of items, etc. It has a good amount of variety in worlds.
That said I never have the urge to play Skylander by myself where as I enjoy playing Knack by myself despite what is a completely deeper and more varied game with Skylander.
I hope they make a Knack sequel, adding a lot more moves, maybe Ratchet and Clank style weapons, better co-op character.