What type of 200 amp service disconnect ( type 3 ) is better, a fused type or breaker type? Are they both available with a knife switch type handle?

Neither is better or worse. If this is for a residential installation, use the breaker style.

Fuses are for specific purposes related to motors and other equipment in commercial /industrial applications.

General purpose circuit breaker NEMA 3R enclosures do not have the large handle as the fused disconnect switches do.