Having recently beaten both MM6 & 7, I'm going for MM8. I was annoyed at first by the changes made to MM7 but the changes to MM8 are even worse. Minotaurs, Vampires, Lizardmen? I have no idea what to go for here.

So, you pick up your other party members along the way and I assume there will be new recruits in every town. I gotta say I'm a bit hesistant to spend money on upgrading a character that I might end up throwing away later. Advice?

I'd say to buy the upgrades you need and save your money. There is a lot of money and a lot of powerful characters to play later in the game, so don't be too stingy. But if you think you need to beef someone up, go for it.

And for what it's worth, i kept the guy from the 1st town for the whole game. But not everybody does.

I already have a full party just from the first island and I'm already attached to them. This won't be easy.

Other than your starting character, ALL the characters are interchangeable. You can dismiss any of them at any time and then get them back again at the Adventurer's Inn at Ravenshore (the town after the first island). some people even enjoy building up more than just five characters. There is at least one quest that will require you to take a specific character in your party, which might mean that you'll need to temporarily dismiss someone.

If you like creating character builds yourself, you'll want to find and use the lowest-level characters you can find to join your party and just stick with those through pretty much the whole game.

If you want to have powerful pre-built characters in your party, go find the higher-level characters (though these are often in more dangerous areas of the game that are difficult to survive in at lower levels).

I used pretty much the same five characters through the whole game and finished with more than half a million gold, so I don't think you'll have to worry about running out of gold if you build up certain characters that you later end up dismissing.

I guess I'll just upgrade the characters and then switch if I find something better. As you say, gold is easy to come by. I already have 70000 and only played a couple of hours. Usually the MM games start out difficult, or well, challenging, and then it's downhill. This game seems to be downhill from the start.

I'm interested in what it was exactly that dissapointed you in MM7 :) Most fans both adore 6 and 7 a lot!
Another alternative that I see being used often in MM8 is using a save editor to create all 5 party member from the get go, allowing you to start your own build from the very start and just stick with those characters for the whole game (save those few quests where you actually need a certain character in your party, both those moments are extremely rare and dealt with rather quickly!

Oh! I didn't dislike MM7, but the changes made since the last game annoyed me at first. After beating it I must say I prefer it over MM6. The spells were more fun, and there weren't any horribly tedious dungeons in MM7.

Still World of Xeen will end up my favourite after I finish MM8.

To be honest, you probably won't need any tips for MM8 unless you're trying something particularly challenging in your playthrough - it's much, much easier than MM6 and MM7.

It's still one of my favourites, though (partly nostalgia I think, it was the first one I played) and has some great stuff in it.

[Some spoilers from now on]

Party-wise, I have two main strategies:

For quicker playthroughs, don't get attached to your characters and swap them as soon as you can recruit the lvl. 50 of that class. It's surprisingly easy to get an entire party of lvl 50 characters quickly with little effort, and having your main character still in the 20s. You'll steam through the quests and complete the game very quickly.

For longer, more immersive playthroughs, pick the lower-level characters early on and level them up exactly how you want them (definitely more challenging this way, but it's also the more traditional way and feels less like cheating)

Classes I usually go for Cleric, Knight, Cleric, Vampire/Dark Elf, Necromancer for a well-balanced (sort of "easy") party.

Vampire's have some neat spells, but Dark Elves can Grand Master the Merchant skill.
The dragons are also fun for a while until it becomes annoying that you keep accidentally annihilating the rest of your own party with Flame Blast (a more powerful version of Dragon Breath)

When choosing Light/Dark (although you can learn both magics, you have a sort of choice of which you side with) I recommend Dark, because you can't to Murmorwoods by coach/ship, however you can get the Shadowspire on the coach - but it's only a minor difference. Also, Shadowspire has more shops and such.

[Edit]
After writing this I realllly want to play the game again now :P