Knee pain is a tricky thing, I rode my 3-speed again last week and the saddle was way too low, and my knees hurt a lot after only 2 miles (I average 50+ per week).

I started by commuting a year ago and rode an old 3 speed, alternating with my MTB when I wore trousers. I desperately wanted a new, dedicated commuter but it took me a year to figure out what I wanted. In the meantime, I tweaked the MTB fit-wise and accessory wise (racks, fenders, clipless pedals). The saddle has gone up a lot over the past year, but the knee pain has gone away (barring pushing too hard uphill against a head wind for too long!)

By the time I figured out what I wanted, I knew enough about my riding style to be really glad I'd waited! Upgrade what you have and learn what you like--you might be surprised. I'm picking up the Bianchi San Jose tomorrow, and a year ago I would've chosen a Dutch bicycle or a Pashley Princess, had such a bike been available.

Good luck with the fit and the riding. Ice three times a day for 15 minutes works wonders. A generic reusable freezer-ready gel pack from the pharmacy wraps around the joint nicely if you prefer not to use a bag of peas.