I have never used fondant and i am planning to use some to cover and decorate a cake...Can I use a knife to cut it or do i really need one of those wheel cutters ?

I am not a fondant pro by any means, but if you are referring to cutting it once it is on your cake and smoothed out, then yes, you can just use a knife. I think most use the wheel, or a pizza cutter even, just because it rolls and is faster/easier to use. HTH!

No i am planning on cutting some small 1-3 inches shapes to decorate on top of the cake...

for easy stuff use a pizza wheel or a nice paring knife

so what kind of stuff requires a professional tool ?

I have a pizza wheel for cutting my fondant, but I've used all sorts of items from my kitchen that I already own. I just think of what sort of pattern I want to make then I look around and find things that will work. You really don't need much in the way of professional tools. The most handy are the pizza wheel/cutter, some impression tools like for 'quilting' effect, and letter cutters. It's not necessary to spend a lot, although there are tons of special tools at the cake stores, online, and in catalogs.

if you need intricate cuts, you can use an exacto knife or a scalpel

Thanks !

I find that a good paring knife & straight edge works best. I've never used a cutting wheel. If you are cutting common shapes, metal cookie cutters work great.