Heroes of Might and Magic V Previews
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Hero characters can do just about everything they could in older Heroes games, and then some. You'll still need them to lead war parties of peasants, skeletons, demons, or whatever you've commissioned, and they'll still grow in power as they gain experience levels. Hero characters will gain access to new powers and skills, such as the game's schools of magic, as well as various combat abilities such as counterstrike, which affects how much damage your troops do in battle when retaliating, and miscellaneous abilities, such as diplomacy, which lets you hire bonus units at any unit-producing camps you happen to capture in your travels. And like in the more-recent Heroes games, hero characters can carry specific items in their inventories, such as magical weapons, armor, and artifacts, as well as siege equipment, into battle. In fact, heroes can be a true deciding factor in battle in Heroes V.
And a snip from Celestial Heavens' article:
Another change is, you don't have to upgrade creatures to make them effective. Even basic Gremlins can shoot. Even basic Vampires drain life. Even basic Pixies have a no retaliation/multi-square attack. Take an Archer. Useful damage range (2-4) and an interesting special that allows them to direct their arrows to an area of 9 squares; damage is halved then, but this special may come in handy quite regularly, especially when opponent stacks are massing in front of your body guards. Now, the Marksman upgrade loses this special (yup, it does), but gains another, of course: Apart from having massively better stats especially in terms of damage the Marksman will ignore the defense rating of the attacked units on very short distance. So if those tough level 7 stack looms before them, but is not QUITE adjacent, they might do one HELL of a mess of them. So while the upgrade is clearly worth it, the basic unit is not useless, on the contrary. Nearly all units have specials and even Peasants, the weakest unit in the game, will give you 1 gold per unit each day (but the upgrade loses this special again). So using units requires thought. All units have their use, upgraded or not, and upgrading is not something you do mechanically.