Don't believe the hype about Malia, my Wife and I just came back from 11 nights there and had a great time. I am 34 and she is 29.
It is a very British orientated resort but there is still some traditional aspects still in place...just. We were actually quite shocked by how unrowdy it actually was, certainly having seen Faliraki close up in the early 00's it isn't a patch on that level.
We actually went to Malia in 1997, so it was ten years ago. It is huge now, certainly compared to then, but I would certainly recommend it to people who like a good nightlife. You can join in as much or as little as you want, and there are always less livelier bars if you want to get away from the hoardes.
Of course your alternative is Stalis, which is a few minutes away and is less lively....
There are some really great restaurants in Malia though. Avoid the British themed places except for the Red Lion, which to be honest is as good pub grub as you will get anywhere.
La Grande Trattoria is a nice Italian, Sirtaki & Napolatana are both great traditional Greek restaurants......the quality of food was much better than I expected, certainly up to other Greek resort standards.
If you need any info on Malia give me a shout. As for alternatives, Stalis I have mentioned, we also drove through Hersonnisos and that looked alright, a bit more built up than Malia though.
Knossos? Not far at all from Malia/Stalis area. We did it in 1997, not this time. It was ok, prepare for serious heat though.