Which is better, attacking or defending?

Hmm, that's true. But in the 5th game, there's a useful secondary skill – dodge. I've never actually tried to calculate the damage from direct attacks. I think it's more useful to develop secondary skills, especially "fight to the last": combined with regeneration, you can use five demons to wipe out legions of neutrals.

There are also cool secondary skills in attack, such as archery and tactics; sometimes I take attack just because of them. With archery (+20% damage), elf archers become real monsters, and with tactics, furies reach everyone on their first try. And if we're talking about leveling up a super ability, there's really no choice to be made here;)
But still, if I have to choose between attack and defense, I prefer defense.