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On level one, I take Dryads because they have higher damage, they heal thanks to Ents (which is much more useful than the Hive), and the one-point difference in initiative isn't fatal.
On level two, the Wind Dancers are undoubtedly the best: +3 to defense (plus additional defense from traversed cells), higher damage, and one more point of speed. Plus, it's rare to get a chance to use the Death Ripple ability of a Dancer in a battle against a human player.
On level three, I take Masters: Forest Archers may have more damage, no penalty, and one more point of initiative, but what is Enhanced Shot compared to Double Shot? And what if one of them is a lucky shot? (After all, there's a much higher chance of a Master hitting with a lucky shot, as they have two shots, compared to a Forest Archer with one...)
But on level four, I have a difficult choice. The Elders can cast spells, transfer mana, and have decent ranged attacks, but I often have problems with magic on my hero, so it makes more sense to take Elders? So, I take both... depending on the situation.
On level five, I completely agree with Witcher. If you're developing Light magic, then definitely take the Light creatures; if you're developing a warrior, take the combat creatures.
On level six, I honestly take whatever I can get. Do they entangle everything? Yes. Do Nymphs heal thanks to any creature? Yes. And that's all I need... unless I have the opportunity to spend some money. Then, again, it depends on the situation: to protect ranged units in the rear (more defense and retaliation is needed), take Ancients; to go out into the middle and entangle, take Wild creatures (better attack).
But on level seven, there are no questions – Crystal Golems.