The cheapest human unit - maceman - kills heavy armored units like Knights and Swordsman. Maceman has a Crash damage with his mace - and Knights and Swordsman can have 80% of arrow armour, but 0 crash armour.
For town defense I like to keep a lot of archers to take care of light armored units and enemy archers, and maceman to take out any heavy armour units.
Also if enemy brings Mounted units - mounted knights e.t.c - you`ll need Halberdiers - they are absolutely deadly to the mounted knights
Another good advise - as soon as your archers gain a level or two, spend all the skill points on the Ammo.
And yeah - the higher level your troops are - the higher your army strength gets.