Basically, this game encourages you to use what is locally available to a certain extent. It does this through the wives/artifacts you find in a certain place. Therefore I try to kill the Kraken and Captain James quickly to get Mirabella in Freedom Islands, as well as another quest to get a pirate flag, and there's also a pirate belt too. All of this turns Pirates and especially Sea Dogs into killing machines, so you can clear out the Freedom Islands this way.
But then it becomes too much of a hassle to keep going back to Freedom Islands to replenish the stocks of Pirates/Sea Dogs, so I move on to Dwarven units, with the appropriate artifacts, in Kordar.
I never use peasants or devilfish. I can't really comment on them for this reason, but my rationale for not using them is that I'd rather have fewer stronger units that I can successfully keep alive, rather than a massive stack of cheap units that will need replenishing after every fight. This is what is so good about the Dwarven units, especially the Giants. If you manage them correctly you can ensure zero losses in most fights.
There are a couple of units I use all the time, however. These 2 are my favourite in the early/mid game.
Royal Snakes (2 square attack, no retaliation)
and the best of them all:
Griffins (huge hitpoints, huge stack with Griffin regalia, huge movement, unlimited retaliation). Really, this is close to the best unit in the game, at least in the first half.
