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Diamonds are <i>hard</i>, but brittle, and not particularly strong.

Diamond as a basis for armor doesn't make much sense.  Brittleness is bad when sudden impact is exactly the stress being defended against.

If you make the individual particles small enough so that their brittleness doesn't matter, then whatever is holding all those particles in place becomes the material whos properties really matter.  There might be some dissipation due to the friction between particles, but that takes a large volume to be effective armor.  You might as well hold sand in whatever matrix you were going to put the diamonds in.