Disclaimer: this is a partial, very much unfinished list (but I'll update it with your
suggestions). Also, it's highly dependent on your tactics and style.
Best 1st level unit: swordsman or elf.
Best 2nd level unit: guardsman or pegasus.
Best 3rd level unit: gryphon.
Best 4th level unit: trent. Sadly, only occasionally available as mercenary. Otherwise, war
elephant.
Best normally available guard: monsters.
Best guard a contract can get you: warriors of light. Also best guard overall. Close second is
ancient guard. There are stronger guards, but not necessarily good for the province.
Best armor: anything "of the ancient".
Best light armor helmet: Eagle's Helmet (esp. for an archer).
Best cloack: claock of rainbow.
Best melee weapon: soulslayer (highly subjective!) - because is right-arm-only, so you can
hold a shield while clobbering and stealin' hitpoints.
Best bow: Renver's Bow - anything Renver's is the best choice, for an archer.
I'm not really proficient with magic stuff, but still, here goes some:
Best 1st level spell: toss-up between summon imp and magic arrow.
Best 2nd level spell: fireball.
Best 3rd level spell: not sure. Maybe Inferno.
Best 4th level spell: mass suicide! Seriously, try this spell, it's a game-changer.

For me the Best First Rank NORMAL unit is Pikemen. They can get Armor Piercing at level 8 and that inherent first Strike ROCKS. I love how enemies just run themselves onto my pikes hehe. Swordies can be ok if blocking very narrow choke points but pikes do better overall.
Elves also make a great first level archer unit. I mean naturally armor piercing shots rock, plus double shot as early as level 1 and fire arrows at 5.

Best 2nd rank goes to Guardsmen for many of the same reason as pikemen although they get the Armor Pierce first and have to earn First Strike.

Agree with the rest of the quoted.

My play style is usually let them come to me to die while my Mage Destroys them from a distance.

Guardsmen aren't bad, granted.

Mages are too soft of a target for my taste.

Pretty good list! I also think swordsmen are best, they have higher defense than pikemen, which is what is needed to guard the scout or mage. Pikemen do more damage,but they die too quickly.
2. level I would go with Dryads.
3. Ghosts or Demons.
4. Not sure yet, but I had a Treant once and it was useless^^

interesting list but i don't think you can say it this general because it is very situational
in the start i prefer spearmen as rank one units because they are cheap and need no ressource
later on i try to get elves - by then only my commander and new heroes in training are carrying rank one units - so i prefer elves with they high range (on higher levels they can get up to range 9 i think) plus precise shots and fire arrows
the rank 2 i buy all the time are guards men - in the army of my commander they protect my elves and on all other heroes 3 of them are good to guard 2 clerics
rank 3 i like clerics- long range healing is awesome especially for a warrior
rank 4 i mostly go with paladins they are quite sturdy and fast - but i agree a treant with haste is way better

same goes for the spells - early on i like magic arrow - but later on only mages and commanders are still casting and then i prefer astral energy - a second turn for a paladin does more damage than a magic arrow in most cases and
for all other ranks i depends on the equipment - if i get a lot + spellpower i want damage spells (firestorm comes to mind) if i get plus summoning i will want to get create golem and summon phoenix
i really like timestop on an enchanter - a lot of units and all are getting another turn is awesome

on the equipmentside - the mail of ancients is awesome for warriors but if i can get my hand on a full dragons set i would take that (spell immunity rocks)
for my commander the winged armer is insanely strong (+ 4 hill knowledge on the party)

but thats just my 2 cents

You managed to recruit a ghost? Wow. Ghosts definitely got my attention/respect when one caused the defeat of my army (with a sub-level 10 Warrior).

A trent + a competent hero is, IMHO, a force to be reckoned with: initially may be somewhat weak, but just a few points of defense + resistance make it almost unbeatable. In fact, I feel like starting a new game (single) just so I can try to recruit one, for the sheer fun that battles become later in the game.

Is there any trick to "attract" a certain type of units as mercenaries?

I didnt really have that tree for too long a time, got it near the end of a big shard where everything else in my army had very high levels so it looked pretty bad. I will try them again.
The ghost I had on a very early shard when I found the scroll. Needless to say the shard was very easy.^^

Tier 1: Dwarves. Buffed swordsman with same abilities + Poison immunitiy and Hills bonus.
Tier 2: Thug. 35hp + 15 damage + stunning blow + (potential)Crushing blow. 2-3 of these can
easily take on tier 3-4 unit.
Tier 3: If you hero can give free movement on different terrain, knight >>> gryphone.
Demon>gryphone. BTW, on this tier all units are good, if you use them right.
Tier 4: Hydra. Round attack, Poison, regeneration and 200 hp.
Best cloak: Phoenix feather. Poison immunity.
Best 1st level spell: Astral energy/Fear
Best 2nd level spell: Phantom form

1). Pikemen / Swordsmen. 2/3 Melee Defense and 3/5 Ranged Defense is not much of a difference.
The fact that Pike's can Take out the enemy BEFORE they get hit is. Also the fact that Pikers can
get Armor Piercing at level 8 and even Armor Damaging at 12 is more useful than the Parry that
Swordies get which is only useful vs FIRST attacker. Both get Forced March.

I just thought I may add here. If your fighting a Lot of Brigands early on Swordies may be more useful because of Thiefs Agility not Triggering Counter Attacks, Parry Still does reduce this damage I believe when it's the first hit plus the higher defense does help reduce damage by 1 more.

2). Dryads are Rank 2 units NOT Rank 1.

i think jamotide did write that dryads are rank 2 but you might have misread it there stands "second level i would go with dryads" he just used a capital I which made it look like a 1

3/5 ranged defense - difference between guaranteed 1 damage from 0 level slinger and 53% of 0.
Pikes worse vs barbarians, because they activate their berserk BEFORE hit. And take higher
damage from axes.
And, honestly, I rarely see first two rings without them.
In the long run swordsmen just better.
Pikemen stuck as "anti tier 1 units", because heavy T2+ can soak first strike, nearly kill them,
and finish with second strike. Can be seen vs Minotaur - first strike, berserk, dead pikeman.
Smordsman can kill troll or knight with little to no help.
http://imageshack.us/m/508/9530/swordfb.jpg
http://i46.tinypic.com/u07pe.jpg
Halves enemy armor AND have doubleshot AND improved rest AND can gather ammo

Argh, how do you manage to have lvl 30 units? Mine never got past lvl 10...and rarely over 5 !! :(

I didn't make "money" (gold and/or gems) an issue: best guards money can buy - if you absolutely must have your province protected. Yes, as I said, there are stronger guards than monsters, but they all come with a -1 (at least) mood or other drawbacks.

Good point! I failed to take that into consideration. Oh, well, can't resist, they're just too good. Or I've just gotten used to them, and now they have become a very useful tool in many situations.