Some sort of magically hardened obsidian would actually be far better. Edges on obsidian can get down into the range of a couple of atoms thick. They still use it in medical operations sometimes for this reason. However like diamonds they shatter quite easily, thus the need for some sort of magical enhancement. Diamonds would be completely useless as weapons without it either and they aren't known for the sharpness of their edges. So I wouldn't give them any special properties for weapons. If magic was used to over come that weakness, they'd make a far better material for shields or armor than a weapon.