[Destroyer]

I've got 3 kids..all grown... 2 boys and a girl.. the one absolute thing I've found is that every arguement has three sides.. what #1 said, what #2 said and what really happened. It's up to you to sort it all out as best you can. Understand that both of them are waiting now for your reaction.. that will tell them how far they can go in the future. Like Willy said, it's not all that uncommon for siblings to fight. And like Reel said, don't make a decision you're not willing or able to enforce.
Leave the police out of it for now.. this is a family matter.
Start by removing all privaleges for both of them... Home, school, back home, schoolwork and chores.. that's it.. No computer games, no tv, no hanging with their friends... no nothing until you get a full accounting of what happened..then give back very limited amounts.. maybe some tv. They need to know that they have to earn back what they used to have.
You also need to sit with the one that did the stabbing and talk to him. Let him know how close he came to doing serious damage, and the consequences of that damage... Ask him why he did it. And don't just ask, listen to what he says.. work with him, not against him.
Oh, and praying together never hurts.. in fact it helps a great deal. IMHO.