We investigate the relationship between photoluminescence (PL) intensity and environmental sensitivity of surfactant-wrapped single walled carbon nanotubes (SWNTs). SWNTs were studied under a variety of conditions in suspension as well as encapsulated in silica nanocomposites, which were prepared by an efficient chemical vapor into liquids (CViL) sol-gel process. The dramatically improved silica encapsulation process described here has several advantages, including fast preparation and high SWNT loading concentration, over other encapsulation methods used to prepare fluorescent SWNT/silica nanocomposites. Further, addition of glycerol to SWNT suspensions prior to performing the CViL sol-gel process allows for the preparation of freestanding fluorescent silica xerogels, which to the best of our knowledge is the first report of such nanocomposites. Our spectroscopic data on SWNTs suspended in aqueous surfactants or encapsulated in silica show that achieving maximum PL intensity results in decreased sensitivity of SWNT emission response to changes imparted by the local environment. In addition, silica encapsulation can be used to "lock-in" a surfactant micelle structure surrounding SWNTs to minimize interactions between SWNTs and ions/small molecules. Ultimately, our work demonstrates that one should consider a balance between maximum PL intensity and the ability to sense environmental changes when designing new SWNT systems for future sensing applications.