If seiza really makes your knees hurt so badly, it might mean you're putting your weight too much forward (trying to avoid the pain from overstretched ankle joints, perhaps?)
When I started aikido, only my knees and my toes would touch the ground during seiza, and it usually started hurting pretty soon. These days, everything *between* those body parts also rests firmly on the ground and I can sit in seiza much longer.
So when you sit in seiza, just relax (I know, I know...
), sit upright, and let your weight sink down naturally. Don't slouch forward or backward to relieve the pain - maintain a good posture, and when it really becomes too much, switch to sitting cross-legged. Try to hold out a little longer each time; eventually everything will get stretched enough and the (worst) suffering will end. It worked for me; and I've really come to like sitting in seiza for relaxation and meditation (though, admittedly, not for more than a half hour).
edit: I should add that Jonathan has a good point - there is a limit to the amount of pain and discomfort you can/should ignore, especially if you've already been injured before. Listen to your body, you know best what you can and can't do.
For the record: one of my knees and my spine were damaged in an accident some twelve years ago. But I've found that doing aikido has improved my posture and I have far less trouble with my back now; and the knee has also become stronger - although that never gave me much trouble to begin with, except for the occasional loud (but painless) cracking of cartilage when I overtax it (often during hanmi handachi), which tended to scare the hell out of my training partners at first ("omygodhe'sbrokenhislegomigodomigod...").