The number of diamond swords are fair. It is unlikely that someone will get a diamond sword before the chests in the cornucopia refill. And once they refill whoever owns the corn will loot the chests. So whoever has the best gear, excluding diamond swords, will own the chest. So iron armour and iron swords are more important that diamond swords. Not only are they easier to craft as iron is fairly common compared to diamonds, they are not much weaker.
The amount of diamonds that spawn, in my eyes, are completely fair. I have only ever gotten a diamond sword once. I had it with full iron armour and I didn't win. I get a stone or iron sword almost every round and I have won 4 times so far without any diamond or iron sword.