In general, the best thing to do against Phantoms is to use an area-of-effect spell, like Fireball, Ring of Cold, or at least basic Stone Spikes. If you only target Phantoms with magic, you'll end up fighting them for the whole battle, but if you use area-of-effect spells, you'll kill the Phantoms and damage the enemy army at the same time... I even like it when the computer creates Phantoms, because at least it doesn't attack my units with magic. And I always take Sorcery, so I have enough spells to kill Phantoms and deal with other "gifts" from the enemy...
Added 3 minutes later
They can be defeated somewhat with the "Unholy Word" spell, but it's still not possible to win. :smile27:
By the way, what kind of army should I have – undead or... uh... living warriors?
