I agree, knowledge matters. It is pipe dream to think that empathy and people skills are enough for manager (or anyone) to compensate for lack of knowledge. Lack of technical knowledge does not imply neither peoples skills nor empathy. Technical knowledge does not imply lack of either
Moreover, I found that non-technical managers had often trouble in empathy and people skills departments. I think that a lot of issues stemmed from non-technical manager having basically inferiority complex, confusing disagreement with disrespect, being unable to distinguish between mistake and lie. Moreover, not understanding culture technical people tend to create or even not being aware that there is such a thing as difference of culture.
The cultural difference is a big thing - non-technical management in my experience value completely different things, ends up insulting engineers or otherwise creates difficult situations. All of that then implies that I as a programmer suddenly have to deal with interpersonal issues that manager created or is unable to deal with.
The thing is, the choice is not between non-technical person with people skills and technical without. The choice is between person with technical knowledge and one without, where the one without them has also disadvantages in peoples skills.