Knuth is not in favour of using kilo/mega/etc with power-of-2 meanings:

> I'm a big fan of binary numbers, but I have to admit that this convention flouts the widely accepted international standards for scientific prefixes.

He also calls it “an important issue” and had written “1000 MB = 1 gigabyte (GB), 1000 GB = 1 terabyte (TB), 1000 TB = 1 petabyte (PB), 1000 PB = 1 exabyte (EB), 1000 EB = 1 zettabyte (ZB), 1000 ZB = 1 yottabyte (YB)” in his MMIX book even before the new binary prefixes became an international standard.

He is merely complaining that the new names for the binary prefixes sound funny (and has his own proposal like “large megabyte” and notation MMB etc), but he's still using the kilo/mega/etc prefixes with decimal meanings.