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British Knighthoods, even honourary ones, are entirely selected by the current government. Similarly, the Queen's public speeches are usually written by the government. They are usually a political ploy, used by the incumbent PM to bestow favours or make political statements.
Blair sees himself as a populist Messiah, often inviting popular public figures to Downing Street parties, such as the popular bands (e.g. Oasis), and bestowing Knighthoods on 'important' Britons, i.e. either those who have done a lot for Britain, or who have attracted positive attention to themselves, as Britons. If a public figure of great popularity is knighted, it makes people feel better about themselves, and about the society they live in, since achievement is symbolically rewarded by the Crown, which represents Britain as a whole.
Geldof's direct organisatorial involvement in Live Aid etc., and his personal donations have probably contributed more to save lives and ease suffering than you could imagine.
Jagger is and was one of the most public rock stars ever, having promoted British cultural values (read: British rock music) to great success.
Sean Connery was semi-publically denied a knighthood for some time, since he was very public with his criticism regarding Scottish devolution. Naturally, Sean resides in sunnier lands himself and only comes to Scotland to play golf, but it didn't stop him making grand public statements about an independent Scotland, thus his shunning.
Honourary knighthoods for foreigners, usually Americans, are the British government's way of saying 'look here, we are your closest ally, we are your friends, don't forget about us, we are really important, us.' It's also a feel-good way of associating Britain with individuals of supposedly considerably achievement, e.g. Spielberg, Greenspan.
Finally, knighthoods don't mean anything, especially in today's society, having been devalued beyond all recognition due to their populist 'handing out' to whoever will pose best with the then-current government. PM Harold Wilson, having been defeated in a popular vote, elected to appoint his chauffeur a Knight of the Realm, just before leaving office. More upstanding and morally righteous Britons, such as Harold Pinter, refused the knighthood. (not wanting to be knighted during Thatcher's governmental period)
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